In remarks at a housing affordability summit, Federal Reserve Board Governor Michael S. Barr said further monetary policy adjustments are likely to be needed to return inflation to the 2 percent target. Barr supported the Federal Open Market Committee’s rate increase last week, citing strong economic growth, a solid labor market and increased inflation risks. He also argued that lasting improvements in housing affordability require expanded supply and targeted support for low- and moderate-income households. Barr estimated the U.S. housing shortfall at 2 million to 5.5 million units and identified restrictive land use rules, weak construction productivity, lasting damage to the building industry from the Great Recession, and higher post-pandemic material and labor costs as major constraints. Homeownership affordability fell to a 21-year low in July 2026, while roughly half of renters spend at least 30 percent of their income on rent. High mortgage rates, insurance costs and property taxes add to the pressure, with low-rate mortgage lock-in further restricting available inventory. Potential responses include easing local barriers to construction, adopting more efficient building methods and using public-private financing to expand affordable housing. Barr highlighted the Community Reinvestment Act and Low-Income Housing Tax Credit as central tools, noting that CRA-related incentives supported more than USD 430 billion in loans and investments in 2024 and that the tax credit produces about 110,000 affordable units annually.

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