Why Gov. Cox is optimistic about home prices as Fed lowers interest rates

SALT LAKE CITY — 2025 was supposed to be a big year for Gov. Spencer Cox.

Cox and his wife, Abby, got married and had kids young. As his friends were “backpacking across Europe,” Cox said he decided they would do that on the “back end, when we had some money and could stay in a hotel instead of a hostel.”

“This was the year we’ve been looking forward to,” Cox said during a discussion at the Ivory Housing Summit at the University of Utah Wednesday. “My daughter … just went to college, so we are empty nesters. And I’ll be darned if three months ago, two of my kids did boomerang back into our basement, and so now I’m not an empty nester. And that makes me unhappy with the economy, even though I have a 3% interest rate on my house, because it’s impacted me personally.”

His son recently showed him a promising listing for a three-bedroom home for $275,000. The only catch: The home was in Indiana.

“I don’t want my grandkids to be in Indiana, I just don’t,” Cox said. “I mean, Indiana is fine. I love my Hoosiers. But that’s a failure if the only reason they are looking to move to Indiana is because they want to have a house.”

Cox used the personal anecdotes to show that the current housing crunch in Utah is affecting more than just young people trying to get into their first home, but the starter home issue remains a focus of his administration.

The governor entered his second term with an ambitious goal to build 35,000 starter homes before he leaves office — a goal that faces economic headwinds, according to his senior adviser for housing strategy.

“The starter home one is really, really difficult,” Steve Waldrip told a legislative committee earlier this month. “And then, overall, new housing units is also really difficult because we have market forces right now where — as we all know — costs have gone up, interest rates are still high, and it makes it really difficult, both on the development side and on the homeowner and acquisition side, to get deals to happen.”

The governor echoed that assessment Wednesday, saying: “We’ve got a long ways to go.”

Still, Cox said he is optimistic that if the Federal Reserve continues to cut interest rates, which it did earlier Wednesday, it will be easier to build the kinds of homes he is focused on.

“We’re getting there,” he said of the starter home goal. “We are … seeing them being built in different parts of the state. We’re just hoping that, again, a combination of things will happen. I really think the interest rate piece — I can’t express that enough, that if we get a couple rate decreases, that we’ll start to see things move in a pretty positive way.”

Mortgage rates impact what individual homeowners will pay monthly, but lower rates will also likely attract more investment in development, making it easier to bring new housing units online.

Cox said starter homes — which he described as homes that young families can afford, that build equity — make up a “missing middle” in housing in between large, expensive homes and apartment buildings. But he also thinks lower interest rates will address the problem of “churn” within housing, where people who are locked into lower rates are less likely to upsize or downsize.

“By building this middle, getting people out of apartments, it does trickle all the way down,” he said. “When we have luxury apartments being built, I’m OK with that too, because that churn, that trickle down actually does happen. There have been studies done all across the world that show that … any housing being built is good for everyone. And as much as I want that middle piece done that hasn’t been done for a while, we just have to get the churn going again.”

Cox also said he is open to preempting certain municipal zoning codes that mandate minimum lot sizes, but he would prefer to see cities act on their own to address restrictive zoning that can limit the amount of housing built.

“My hope is that without preemption, we’ll have enough cities that are willing to do this, that understand how important it is, and we are seeing more and more of that,” he said.