Federal Reserve Chairman Jerome Powell expressed hope that building material bottlenecks that have raised housing costs will begin to ease during a hearing today before the House Financial Services Committee on monetary policy and the state of the economy.
"Single-family housing demand been quite high and in addition prices have been driven up by material shortages which we hope will be alleviated," Powell told lawmakers.
"On the supply side, they [builders] can’t build enough houses. There isn’t enough lumber," the Fed chairman added. "Lumber prices have gone way down but they are still twice as high as before the pandemic. We don’t know it, but we think that will be the pattern – prices come down as more supply comes online to meet the higher demand."
Powell also made it clear that while the Fed can affect interest rates, it can do very little to remedy supply side issues that builders continue to deal with.
"There are limitations around the availability of some raw materials and labor and of zoning and things like that and nothing we can do will really affect that," said Powell.
Although he said that affordable housing is largely out of the purview of the Fed's responsibility, Powell noted that this "is certainly a very important issue."
This is also a top priority for House Financial Services Committee Chairwoman Maxine Waters (D-Calif.), who announced at the hearing that she will be introducing the Housing is Infrastructure Act this week "to ensure that Congress finally makes long overdue investments in the housing market. This bill would provide a historic investment of more than $600 billion to ensure that affordable housing is available all across the country."