Pulte's Powell Problem: Data vs. Derangement
Bill Pulte, Trump's housing chief, didn't hold back at the ResiDay conference, calling Fed Chair Jerome Powell a "maniac" and "deranged," blaming high interest rates for the housing market's woes. Trump’s housing chief calls Jerome Powell a ‘maniac’ who is ‘deranged,’ arguing high mortgage rates are ‘really hurting people’ It's a bold claim, especially coming from someone overseeing Fannie Mae and Freddie Mac. But let's dissect the data behind the rhetoric.
Pulte argues that Powell isn't "looking at the data," claiming inflation is "way lower" while high mortgage rates are "really hurting a lot of people." He's right about the pain. Home affordability is at its lowest point in decades, and the average age of first-time homebuyers has crossed 40 for the first time. That's not just a statistic; it's a generation locked out of the American dream. But is Powell really ignoring the data, or is there more to the story?
The Fed's aggressive rate hikes, implemented since mid-2022 in response to the highest inflation in 40 years, undeniably cooled the housing market. Rates jumped from sub-3% to over 6% (more than double!), creating a "lock-in effect" where homeowners are reluctant to sell, unwilling to give up those sweet, low rates. Berkshire Hathaway HomeServices nailed it: high price gains don't offset the higher interest costs for a new home.
Now, let's talk about inflation. Pulte claims it's "way lower." The data paints a more nuanced picture. While inflation has indeed come down from its peak, it's still above the Fed's 2% target. The latest figures show inflation hovering around 3-4% (depending on the specific index you're tracking—CPI vs. PCE, for example). So, while Pulte's not entirely wrong, he's definitely cherry-picking. Is Powell "deranged" for prioritizing inflation control, even if it means short-term pain for the housing market? Or is he simply playing the long game, trying to prevent a return to runaway inflation?
Fannie, Freddie, and Equity Stakes: A Dealmaker's Dream?
Pulte also hinted at big changes for Fannie Mae and Freddie Mac, suggesting they might take equity stakes in companies in exchange for "doing smart business constructs." He specifically cited the government's investment in Intel as a model, arguing Trump is a "great dealmaker" who will ensure the government gets something in return this time.
This is where things get interesting, and frankly, a bit vague. Details on what these "smart business constructs" might look like remain scarce. (We're talking theoretical equity positions in exchange for… what, exactly?) The idea of Fannie and Freddie taking equity stakes is unprecedented and raises a whole host of questions. Would this create conflicts of interest? Would it distort the market? And perhaps most importantly, would it actually benefit American homebuyers, or would it primarily benefit well-connected companies?
I've looked at dozens of FHFA statements, and this "equity stake" concept is unusual, to say the least. It sounds more like a venture capital play than a government housing strategy. And that raises a red flag. The risk here is that Fannie and Freddie become tools for political dealmaking rather than instruments for promoting affordable housing.
Powell's "Maniacal" Data: A Matter of Perspective
Pulte's outburst, while colorful, highlights a fundamental tension: short-term pain versus long-term stability. The housing market is hurting, no question. But blaming Powell and calling him names doesn't solve the problem. It's a complex issue with no easy answers. The data suggests Powell is acting cautiously, perhaps too cautiously for some, but not necessarily "derangedly." And Pulte's vision for Fannie and Freddie, while potentially innovative, needs far more scrutiny before it becomes reality.
So, What's the Real Story?
It's not about Powell's sanity; it's about conflicting priorities. Pulte wants immediate relief for the housing market, even if it means risking inflation. Powell seems more focused on long-term price stability, even if it means short-term pain. The question is, which approach is ultimately in the best interest of Americans? And that's a question the data alone can't answer.
