Not only has that made mortgages much more expensive, it’s exacerbated the long-standing shortage in housing supply, particularly at the lower-priced part of the market. The market machinery that cranks out housing supply at the bottom of the market has effectively ground to a halt. But falling rates will not solve the underlying structural problems that caused the housing shortfall in the first place. Once rates normalize, housing affordability will simply return to where we were prior to the pandemic, going from dismal to just bad. Lawmakers should complement this support to increase the supply of housing with targeted help for those looking to buy their first home.

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Persons: Jim Parrott, Parrott Ryan, Mark Zandi, Jim Parrott Ella Parrott, Mark Zandi Moody's, it’s Organizations: Urban Institute, Moody’s, CNN, National Association of Realtors, Congress