Kevin Warsh's First Fed Meeting: What to Expect

The housing market has been supported by improved mortgage spreads that reduced rate volatility and kept mortgage rates below 7%. Ahead of the Fed decision, the main housing watch is whether Chair Kevin Warsh can steer messaging away from a new hike cycle while inflation remains above target.

Today, oil prices are at $75.80, which is a significant factor as the Federal Reserve will announce its monetary policy under new Fed Chair Kevin Warsh. For many months, Federal Reserve hawks have said that the Iran conflict was a major reason they’ve been more hawkish, as energy inflation can make the current inflation data much worse going forward.

For the housing market, the most important thing is for Warsh to convince the hawks to be patient. The housing market has held up well this year, thanks to mortgage spreads, which have improved over the past few years and are now almost back to normal.

Obviously, Warsh was brought in by President Trump to cut rates because Jerome Powell wasn’t doing it fast enough. The Federal Reserve, before the year started, was on course for at least two, maybe three more rate cuts in this rate-cut cycle, and then the conflict with Iran started.

Of course, things are much different with oil prices where they are today, below $80. We had oil trading between $67-$82 before, without the Fed ever saying they needed to be more hawkish because of oil prices.

For tomorrow and for the rest of the year, the only job Warsh can do now until inflation cools down is to get the Fed hawks to shut up about rate hikes. We had two to three rate cuts working their way through in 2026 due to a soft labor market in 2025, but that has changed amid rising inflation.

Warsh is going to try to make the Federal Reserve quieter, probably killing the Fed dot plot and maybe making a rule that Fed governors can’t talk about their personal monetary policy choices at events, which I think will be very hard in this day and age of social media.

As you can see, Fed policy really matters for what I call the slow dance between the 10-year yield and the 30-year mortgage rate.

2026 has had a lot of crazy events, and it’s not even the halfway point, but the housing market has held up well under the circumstances. As our Housing Market Tracker articles have shown, the last three weeks have seen positive year-over-year growth with three weeks of negative year-over-year inventory growth.

Housing starts to fade when mortgage rates exceed 7% and mortgage spreads widen, creating greater rate volatility. Today, we are closer to 6.50% than to 7%, and Warsh’s first job is to try to convince people already suspicious of him to show patience for now.