U.S. 10-year Treasury yields ($TNX) jumped 13 basis points to 4.95% after news that Jerome Powell will step down in 2026. The announcement intensified debate over the candidates for the next Fed chair, triggering volatility in real estate and banking stocks as investors reassess succession risks and leadership philosophies.
Powell’s Departure Sparks 2025 Fed Succession Race
Federal Reserve Chair Jerome Powell confirmed he will exit at the end of his term in early 2026, according to Bloomberg sources (Nov. 20, 2025). Markets reacted immediately: the S&P 500 Financials Index ($SPF) fell 2.1%, and regional REITs declined 1.8% on average (Reuters). Mortgage rates rose 19 basis points to 7.17%, the highest since mid-2023 (Freddie Mac). Overnight index swaps now imply a higher probability of two rate cuts in 2026, reflecting uncertainty over the Fed’s policy path. The U.S. housing sector, with $5.7 trillion in market capitalization, is particularly sensitive to leadership changes at the Fed.
Real Estate Markets Respond to Fed Succession Risks
Interest-rate-sensitive sectors reacted sharply. Homebuilders D.R. Horton ($DHI) and Lennar ($LEN) dropped over 3%, while commercial REITs tracked by NAREIT saw $2.4 billion in net outflows for the week ending Nov. 22, 2025. Purchase applications fell 4.2% week-over-week, the steepest drop since July 2024 (Mortgage Bankers Association). CME FedWatch data show implied probabilities of a late-2025 rate hike rose from 27% to 43% within 48 hours. Investors must now price in leadership philosophy, regulatory stance, and monetary policy approach alongside existing market risks.
Investor Strategies Amid Fed Chair Uncertainty
Defensive REITs focusing on health care and industrial assets, such as Welltower ($WELL) and Prologis ($PLD), declined just 0.4%, suggesting rotation into less interest-rate-sensitive segments. Fund managers increased cash allocations in real estate funds from 4.0% to 5.7% post-announcement (Bank of America Fund Manager Survey). Short interest in homebuilders reached a 24-month high (IHS Markit). Investors are considering floating-rate mortgage bonds and real asset ETFs to hedge policy risks. Tracking Fed policy updates and market commentary is critical for both tactical and strategic positioning.
Leading Candidates for the Next Fed Chair
Prominent contenders include Fed Vice Chair Philip Jefferson, favoring data-driven policy, and San Francisco Fed President Mary C. Daly, known for labor market focus and communication skills. Other potential nominees include Fed Governor Lisa Cook and former Treasury Undersecretary Nellie Liang. Each brings distinct priorities on inflation, employment, and regulatory intensity.
Goldman Sachs research (Q3 2025) predicts a Jefferson-led Fed may maintain the policy rate at 4.75–5.00% through 2026 unless inflation overshoots. Daly may prioritize wage growth, tolerating short-term inflation for employment gains. Sector ETF flows indicate a tilt toward utilities and consumer staples, reflecting hedging behavior amid leadership uncertainty. The FOMC composition and the 2026 midterm election cycle add additional political scrutiny to the succession process.
What Real Estate Investors Should Watch
Investors should monitor succession headlines, Fed communications, nominee speeches, and Congressional testimony. The new Fed chair will influence mortgage rates, credit availability, and property values. Proactive portfolio repositioning and scenario planning are essential, as the opportunity window may close quickly once a chair-designate is named. For ongoing insights, see market outlook reports and detailed Fed policy coverage at ThinkInvest.org.
Tags: candidates for the next Fed chair, Fed chair succession, real estate market, monetary policy 2025, interest rates
