Core Insights - The U.S. housing market is facing significant challenges, and recent Federal Reserve rate cuts are unlikely to improve affordability [2] - A structural housing shortage is identified as a key issue in the U.S. housing market, with a need for more housing units [3] - The Federal Reserve's previous purchases of mortgage-backed securities during the pandemic may have contributed to overheating the housing market, though the extent is uncertain [3] Economic Context - The U.S. labor market has softened, with the latest unemployment rate at 4.4%, which is above the cycle low of 3.4% recorded in April 2023 [4] - The Federal Reserve is transitioning from a restrictive to a neutral policy stance, indicated by several cuts to short-term rates [4] - Long-term yields and mortgage rates have decreased from their cycle highs over the past year [4]