Housing Market Decline Is Intended Result of Fed Policy

Brian Deese, White House National Economic Council Director, stated Tuesday that the Fed’s tightening efforts are “the intended outcome” of the housing market’s decline.

David Westin, the host, asked: [relevant exchange starts at 17:05] “[O]ne area that isn’t strong right now is the housing market. Every day, we see new numbers that indicate a significant softening of the housing market. What do you think?

Deese replied, “Well, sure, it’s something we’re monitoring very closely.” This is, obviously, the desired result of the Fed’s tightening efforts. It’s where you can see tightening in its most direct form due to the impact of mortgage rates on economic activity.

Our main focus when we examine the housing market is affordability. One important aspect of this is to take a step back from the present moment. America faces an affordability problem that has been exacerbated by a decade of underinvestment in the housing supply.

While we can address immediate problems, the long-term solution to this problem is to build more affordable housing supply in areas and jurisdictions where people are looking for economic opportunities.

It takes hard work from states and localities to change zoning or land use policies. We are looking at creative ways to use policy tools, such as conditioning transportation dollars for communities with sound land use policies in order to build more affordable and denser housing.