What a Fed Chair Firing Could Mean for the Housing Market

President Donald J. Trump has become increasingly disgruntled with Federal Reserve Chairman Jerome Powell for resisting calls to slash interest rates.

On Wednesday, Trump denied reports that he plans to fire Powell, hours after reportedly telling a room full of Republicans that he planned to do so.

Trump maintains federal rate cuts would lower the costs of government borrowing, while Powell has warned a premature rate cut could worsen inflation and ultimately raise borrowing costs.

Housing experts seem to agree that a termination would not be good news for the real estate market or future homebuyers.

“If long-term inflation expectations increase, that would flow directly into a higher mortgage rate,” Eric Finnigan, vice president of Demographics Research at John Burns Research and Consulting, tells Realtor.com®.

“At today’s rates and home prices, it costs twice as much to own an entry-level home than rent it. Even higher mortgage rates would push homeownership out of reach for even more potential first-time buyers who don’t have a cushion of home equity in their current home.”

What the experts are saying

A firing is generally considered to forecast so much economic turmoil that even Republicans are warning Trump against the move.

“If anybody thinks it would be a good idea for the Fed to become another agency in the government subject to the president, they’re making a huge mistake,” GOP North Carolina Sen. Thom Tillis said in a floor speech, according to the Associated Press.

“If [the markets] thought for a minute that [a Fed chair] wasn’t independent, it would cast a spell over the forecasts and the integrity of the decisions being made by the bank,” reportedly agreed GOP South Dakota Sen. Mike Rounds.

What would a firing mean for the housing markets?

“We’ve also calculated that a 1 percentage point increase in the 30-year mortgage rate means an additional 4+ million households would fail to qualify for a $400,000 mortgage today. That’s a -16% decrease in number of households able to qualify. So the impact would be material,” says Finnigan.

Richard Redmond, real estate financier and CEO of Redmond Mortgage Capital, a private lending firm, agrees that a Fed chair firing could negatively affect future homebuyers.

“If President Trump were to fire Jerome Powell and investors viewed that as increasing the risk of holding U.S. government debt, bonds would sell off and interest rates would rise,” he says. “That would hit the housing market hard—discouraging first-time buyers and locking current homeowners into place, since they’d be reluctant to trade up and give up their low-rate mortgages.”

Jake Falcon, CEO of Falcon Wealth Advisors, agrees that booting Powell would introduce volatility into the bond and real estate markets.

“While the intent might be to push for lower interest rates, markets could interpret the move as political interference in monetary policy, which could shake investor confidence and drive long-term interest rates higher—not lower,” he tells Realtor.com. “Even if short-term rates drop, inflation expectations could rise, leading to higher borrowing costs over time.”

And mortgage expert Doug Perry, the strategic financing advisor at HouseCashin, points to a real world example of a president causing economic harm by lowering interest rates when it wasn’t prudent to do so. In 2021, Turkish President Recep Tayyip Erdoğan lowered interest rates despite the country’s already high inflation.

“The result was significantly higher inflation to the tune of almost 60% per year, before cooler heads prevailed and the government was forced to drastically raise rates,” says Perry. “Regardless, the damage was done to the reputation of Turkey’s economy as well as to its consumers. It was a painful real world example of how critical central bank independence is.”

Who would replace Powell—and how would that affect housing?

Treasury Secretary Scott Bessent has been mentioned as an “option,” however, the president also waffled on that because he “likes the job” that Bessent is already doing, according to Reuters.

“There are a lot of great candidates, and we’ll see how rapidly it progresses,” Bessent reportedly told the outlet.

Another top candidate is reportedly Kevin Hassett, one of Trump’s key economic advisers, and former Fed Governor Kevin Warsh.

Real estate coach and former RE/MAX managing broker Dr. Lee Davenport tells Realtor.com the firing won’t matter as much as the successor.

“Will he be replaced with someone who is aware that we are slowly trending—based on recent inflation data—towards stagflation based on the slow but sure ripple effects in the economy due to tariffs and the immigration policy impacting an already understaffed housing construction workforce?” she asks.

“Ideally, Powell’s successor [would] be someone who understands the precarious position that both the 2025 tariff and immigration policy have put the U.S. economy in and know the key actions to reverse our course towards stagflation.”

Real estate consultant Jonathan Miller tells Realtor.com that “one saving grace is that the Fed chair can influence but not override the board of governors, who will remain in place if Powell exits early. The president has mentioned that he would like to see a 300 basis point cut, which would likely fuel significant inflation growth, significantly damaging the economy.

“All this uncertainty is restraining potential home sales growth.”