Brown Harris Stevens CEO Bess Freedman: Fed Rate Hike Complicates Housing Market

The Federal Reserve's decision to raise interest rates in September 2026 sent fresh shockwaves through a fragile housing market, slowing the expected fall buying season and deepening affordability challenges. According to CNBC, Brown Harris Stevens CEO Bess Freedman stated that the Fed's rate hike "made a complicated housing market more complicated."

The housing sector was already grappling with severe inventory shortages, persistent buyer hesitation, and the lock-in effect, where homeowners sitting on pandemic-era mortgages at 3% or lower refuse to sell. Following the central bank's actions, 30-year mortgage rates jumped sharply to 7.45% on Thursday, September 24, 2026, as reported by CNBC, while Fox Business search snippets tracked similar movement up to 7.14%.

What does this mean for mortgage rates and home buyers?

Borrowing costs are expected to hover between 6% and 7% for the foreseeable future, forcing buyers to abandon hopes of returning to historical lows. Bess Freedman told Newsweek that everyone had their mind wrapped around the 2% and 3% rates seen during the pandemic, but those days are over and are not coming back anytime soon, adding that the market must adjust to 6% and 7% rates for some time.

Data underscores the immediate slowdown in transaction activity following these shifts:

• Mortgage demand from homebuyers dropped 19% year-over-year, according to the Mortgage Bankers Association via Yehey.com.
• Pending home sales managed only a marginal 0.3% increase in August, as reported by Yehey.com and CNBC.
• July business inventories rose 0.8%, highlighting broader economic adjustments tracked alongside housing data.

How are homebuilders navigating the slowdown?

A distinct split has emerged between the new construction market and existing home sales. Yehey.com noted a bifurcated market where large-scale builders have held up better than resale inventory by utilizing financial incentives. PulteGroup CEO Ryan Marshall described rising mortgage rates as a meaningful headwind for the housing sector, though he noted it is not an "unovercomable" one. Builders like PulteGroup have relied on tools such as mortgage rate buydowns and closing cost concessions to keep new construction moving, whereas typical existing home sellers lack the financial flexibility to offer similar price adjustments.

What happens next for the real estate market?

Market participants are preparing for a sluggish fall and winter season with transaction volumes likely to remain below historical norms and price growth moderating. The overall trajectory through year-end and whether the market can find its footing before the spring 2027 buying season depends heavily on the Federal Reserve's next moves and incoming inflation data.