September 13, 2022
WASHINGTON, DC: The Consumer Price Index report released today showed that despite falling fuel costs, rising housing costs continue to keep inflation at historically high levels. Inflation is not under control and housing is the major reason why.
Housing affordability is the worst it’s been in decades. Rising shelter costs, especially rent, conspire with higher interest rates and continues to impact the housing affordability crisis. Rent costs are up 25 percent since the beginning of the pandemic.
For first-time homeowners, the American Dream has never been higher. According to St. Louis Federal Reserve Bank data, the median home price has risen to a record $440,300. Since the pandemic, the annual income necessary to buy a home has increased from $64,400 to $113,500. It is safe to say that no one making under $100,000 has received a $50,000 salary increase over the past two years.
Congress must take action by the end of the year. There is no magic wand to solve the housing affordability crisis, but if we do not, it will continue to worsen next year and the year after that.
The Biden Administration and bipartisan leaders in Congress must work together this year to address the housing affordability crisis. Legislation like the Affordable Housing Credit Improvement Act and the Neighborhood Homes Investment Act have bipartisan support and would create 2.5 million homes over the next ten years.
Interest rates for construction loans are over 8%, constraining supply, undercutting the demand impact of higher mortgage rates. There is no way to solve inflation without addressing housing supply. The law of supply and demand cannot be repealed.
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The National Housing Conference has been defending the American Home since 1931. NHC is a diverse continuum of affordable housing stakeholders that convene and collaborate through dialogue, advocacy, research, and education, to develop equitable solutions that serve our common interest – an America where everyone is able to live in a quality, affordable home in a thriving community. Politically diverse and nonpartisan, NHC is a 501(c)3 nonprofit organization.