WASHINGTON DC –Today’s Consumer Price Index numbers are deeply troubling and will contribute to higher housing costs, which will, in turn, continue to increase inflationary pressure. Inflation is not under control and housing is the major reason why.
Rising shelter costs, especially rent, conspire with higher interest rates and continue to impact the housing affordability crisis. Despite a slight increase in overall inflation, core inflation increased 0.6% from August, following a similar rise the previous month. That pushed the annual increase from 6.3% to 6.6%, a new 40-year high.
Housing affordability is the worst it’s been in decades. According to the U.S. Department of Housing and Urban Development, the median home price has risen to a record $436,800 in August 2022 from $329,000 in March 2020. Mortgage interest rates have more than doubled in the past year. As a result, the annual income necessary to buy the same home has nearly doubled from $64,400 to $120,000. Rent increases are even worse.
There is no way to reduce inflation without addressing the housing supply, and there are no quick fixes. The law of supply and demand cannot be repealed.
While there is no magic wand to solve the housing affordability crisis, if we do not increase supply, 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 supply and 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.
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.