The Federal Reserve's expected rate cuts in September and December will positively impact the real estate industry, especially for smaller builders relying on community and regional banks. Lower interest rates on Acquisition, Development & Construction (AD&C) loans will improve lending conditions, allowing builders to regain market share and increase housing supply. Multifamily developers will see long-term benefits as lower financing costs stabilize apartment construction, despite current high inventory levels.

Additionally, mortgage rates could fall below 6% by 2025, boosting housing demand. While the rate cuts are anticipated to be driven by economic conditions, not political factors, builders must shift their focus to fiscal policy as federal debt levels increase. Rising government spending and debt will likely push long-term interest rates higher, impacting the construction industry. As a result, builders must stay engaged in policy discussions to navigate these changes effectively.