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For Immediate Release

Statement of David M. Dworkin, President and CEO of the National Housing Conference, on the Federal Reserve’s Rate Hike: “Higher mortgage rates are not a sustainable way to reduce shelter costs”


Luke Villalobos

(562) 479-9520

“Today’s decision by the Federal Reserve to increase the discount rate by 75 basis points will significantly increase the cost of homeownership for millions of Americans. The Fed has no choice but to raise rates to address inflation. Higher mortgage rates are a necessary but bitter pill. However, without measures to address housing shortages, higher interest rates will only hurt low- and moderate-income families without having a material impact on home price inflation.

“Higher rates will do nothing to address the key driver of inflation in the housing sector: the persistent, long-term shortage of housing supply. As Chairman Powell noted in his comments, while the number of unfinished homes is high, the inventory of finished homes is still ‘incredibly low, historically low.’

“One of the reasons we have so many unfinished homes is because housing materials costs are so high, and supply chain problems continue to plague the construction industry. This underscores the need to support the construction of more affordable housing, which is underrepresented in today’s market, and to address the long-term and systemic weaknesses in housing supply, particularly starter homes for owner-occupants and low-income rental.

“Every time mortgage rates go up 1 percentage point, the typical homebuyer pays $200 more a month. Given the astronomical increases in home prices, this dynamic is not sustainable. Congress and the Administration need to match interest rate increases with solutions to the housing supply crisis or we will pay the price of higher mortgage rates without the benefit of reduced inflation.”

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