Federal Reserve Chairman Jerome H. Powell told the Senate Banking Committee today that the nation’s home builders are facing several supply-side challenges that are hindering housing affordability and "feel almost like they have been hit with a perfect storm here."
This exchange occurred after Sen. Tina Smith (D-Minn.) said that housing costs are growing faster than wage growth and there is a shortage of housing at price points that people can afford.
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"What we hear from home builders is a series of factors that are really holding them back and challenging affordability," said Powell. "Now you have a shortage of skilled labor so it’s hard to get people on the job – electricians, plumbers, carpenters and other people – no matter what you pay them."
Sen. Smith then asked Powell if immigration policy has something to do with this.
"That’s what we hear from home builders. That’s part of it for sure," said Powell. "It’s also hard to get lots … and the rules for creating new lots are challenging. Material costs too, have gone up and some of that is tariffs. The home builders feel almost like they have been hit by a perfect storm here."
"These longer run challenges I think are going to be there and affordability is going to be a challenge," Powell added.
You can listen to his testimony in the clip above.