American homeowners and aspiring homebuyers are exhausted by mortgage rates that are the highest in this century.

With 30-year fixed mortgages at 6.77% on June 26, the housing industry is stagnant: no buyers, no sellers, and – an important economic indicator – lagging new construction.

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U.S. Housing FHFA Director William J. Pulte, echoing his boss President Donald Trump, puts the blame squarely on Federal Reserve Chairman Jerome Powell.

Related: Fed chair sends strong message on tariffs to Senate panel

Pulte ratcheted up criticism of Powell this week, first calling for his resignation and then delivering a powerful personal rebuke on June 27.

U.S. Housing FHFA Director William J. Pulte blames high mortgage rates on Powell’s “hallucinations” on tariff impact on economy.

Image source: Bloomberg/Getty Images

Housing industry woes tied to interest rates

Pulte, also the head of Fannie Mae, is the grandson of the founder of the mega homebuilder PulteGroup and formerly served on PulteGroup’s board of directors.

The U.S. housing market is especially brutal right now for first-time homebuyers, who can barely afford down payments, since supply shortages have propped up home prices.

The median price for a new home exceeded $407,000 in April, up from $310,000 in 2020. The average mortgage payment also doubled to $2,207 in 2024, according to Bankrate, leaving first-time buyers struggling to keep up.

Related: Fannie Mae chief Pulte sends savage one-word message to Fed’s Powell

Privately-owned housing starts in May were at a seasonally adjusted rate of 1,256,000. This is 9.8% below the revised April estimate. The Northeast, South, and Midwest saw declines, while the West saw an increase.

Pulte blames Powell for weak housing numbers

The Fed’s dual mandate is to prudently monitor monetary policy to maintain inflation (at about 2%) and keep unemployment relatively low to ensure the recession-free economy and its GDP are humming along. It’s a delicate balance.

The Federal Open Meeting Committee controls the Federal Funds Rate, which banks charge each other overnight to borrow money. At the June meeting, the funds rate stayed at 4.25% to 4.50%. The last funds rate cut was in December 2024.

The funds rate is tied to the cost of borrowing money for consumers, investors, and businesses.

Related: Fed official predicts when to expect interest rate cuts

Mortgage rates typically run 2% to 3% higher than the 10-year Treasury note yield, and the Fed Funds Rate highly influences the 10-year yield.

As a result, 30-year mortgage rates have risen to roughly 6.8% from 2.7% in early 2021. The average mortgage payment also doubled to $2,207 between 2020 and 2024.

At the time of the June Fed meeting, Powell said the post-pandemic economy was resilient and stable, but the risk of tariff inflation on prices on the nation’s supply chain prompted a “wait-and-see” approach to holding rates steady.

He repeated those assertions to both the House and Senate panels this week, adding that the expected inflation from the tariffs would likely bubble up into economic indicators for June and July.

If interest rates drop, so will mortgage rates, Pulte said in a June 27 CNBC interview.

Powell “can hallucinate about what tariffs can do,’’ but he’s wrong, Pulte said.

“That’s why we need the ‘Fake High Priest of the Fed’…to lower rates,’’ Pulte said.

More Federal Reserve:

• Fed interest rate cut decision resets forecasts for the rest of this year
• Federal Reserve prepares strong message on long-term interest rates
• Fed official revamps interest-rate cut forecast for this year

Large, medium, and small construction companies are all hurting from the housing crisis, Pulte said. Publicly traded builders are not immune, he added.

“The American people are sick and tired,’’ said Pulte, who earlier called for Powell to resign.

President Trump’s proposed tariffs – essentially an external sales tax to U.S. trading partners that we pay one way or another – face a July 9 deadline.

The president, during a press conference in the White House Briefing Room on June 27, re-hashed his displeasure over high interest rates, calling Powell “just not a very smart person.”

The next Fed meeting is July 29-30. Both Fed and market watchers had forecast the next probable rate cut could appear at the central bank’s September FOMC meeting.

Related: Fed official makes surprising interest rate cut prediction