High US Interest Rates May Have Triggered Housing Recession, Says Bessent
US Treasury Secretary Scott Bessent has warned that high mortgage rates are causing a recession in the housing sector, despite the overall economy remaining stable. He calls for the Federal Reserve to accelerate rate cuts to address the issue.
Us EconomyHousing RecessionInterest RatesFederal ReserveScott BessentReal Estate NewsNov 02, 2025
“I think that we are in good shape, but I think that there are sectors of the economy that are in recession,” Bessent said. “And the Fed has caused a lot of distributional problems with their policies.”
Bessent emphasized that while the overall US economy remains solid, high mortgage rates are still a significant hindrance to the real estate market. He noted that the housing sector is effectively in a recession, hitting low-end consumers the hardest because they have debts, not assets. According to the National Association of Realtors, pending home sales in the United States were flat in September.
The treasury secretary characterized the overall economic environment as in a transition period. Fed Chair Jerome Powell recently signaled that the central bank may not cut rates further at its December meeting, a move that has drawn sharp criticism from Bessent and other Trump administration officials.
Federal Reserve Governor Stephen Miran, who is on leave from his post as chairman of the White House Council of Economic Advisers, also expressed concerns in an interview with the New York Times. Miran, who dissented from last week’s Fed decision to lower interest rates by 25 basis points, argued for a cut of 50 basis points, or 0.5 percentage point.
“If you keep policy this tight for a long period of time, then you run the risk that monetary policy itself is inducing a recession,” Miran said. “I don’t see a reason to run that risk if I’m not concerned about inflation on the upside.”
Bessent echoed this sentiment, stating that the Trump administration’s cuts in government spending have helped lower the deficit-to-gross-domestic-product ratio to 5.9% from 6.4%, which should help reduce inflation. He argued that the Fed should continue to lower interest rates to support the economy.
“If we are contracting spending, then I would think inflation would be dropping. If inflation is dropping, then the Fed should be cutting rates,” Bessent concluded.
Frequently Asked Questions
What is the main concern of US Treasury Secretary Scott Bessent?
Scott Bessent is concerned that high interest rates, particularly mortgage rates, are causing a recession in the housing sector.
What is the current state of the US housing market according to Bessent?
According to Bessent, the housing market is effectively in a recession, with high mortgage rates hindering the real estate market and disproportionately affecting low-end consumers.
What is the Fed's stance on interest rate cuts, and how does Bessent feel about it?
The Fed has signaled it may not cut rates further at its December meeting. Bessent criticizes this stance and calls for accelerated rate cuts to address the economic issues.
What is the impact of high interest rates on low-end consumers?
High interest rates are hitting low-end consumers the hardest because they have debts, not assets, making it difficult for them to afford mortgages and other loans.
What does Bessent say about the overall US economy?
Bessent states that the overall US economy remains solid but acknowledges that certain sectors, particularly housing, are in recession due to high interest rates.
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