Spray-dried powder compacts exhibit viscoelastic properties such as stress relaxation, creep, and delayed elastic strain. This behavior is attributed to the organic binder, which forms bridges between the particles in spray-dried granules, thereby affecting their deformation characteristics. The viscosity and distribution of the binder within the powder compact can affect its mechanical and viscoelastic properties. In this study, the powder was conditioned at different ambient relative humidity (RH) levels, to vary the binder viscosity. Load deformation, stress relaxation, fracture strength, and fracture toughness behavior of ferrite powder compacts were studied as a function of ambient RH both before and after compaction. The loading rate was found to significantly affect the time-dependent response, and the relaxation times decreased at high humidity levels during compaction. It is proposed that increasing the humidity level during compaction increases the number of particle-particle contacts. This simple mechanism of binder redistribution led to slower relaxation times, increases in fracture strength, and elastic modulus of the green bodies, without significantly altering the fracture toughness when powders were compacted at high humidity to a given density.