WASHINGTON, DC — With shelter inflation accounting for 90% of the overall inflation rate last month, the National Association of Home Builders has called on policymakers at all levels of government to take actions that will help boost the nation’s housing supply “in order to ease a stubbornly high housing inflation rate that is harming the overall economy.”
“The Federal Reserve shouldn’t have to fight inflation on its own, as the central bank’s ability to address rising housing costs is extremely limited because shelter cost increases are driven by a lack of affordable supply and increasing development costs,” said Alicia Huey, chairman of the Washington, DC-based NAHB.
While the July Consumer Price Index (CPI) reading was 3.2%, government data revealed that more than 90% of the gain for the CPI was due to shelter inflation, a combination of rent and owner’s equivalent rent, which was up 7.7% from a year ago, the NAHB asserted.
The trade association said that, given a nationwide shortage of 1.5 million housing units, “building more homes is the only way to tame inflation, satisfy unmet demand, achieve a healthy supply-demand balance in the for-sale and rental markets and ease the nation’s affordability crisis.”
“Policymakers at other levels of government can help the Fed in the effort to bring inflation lower by improving the efficiency of the residential construction market,” said Huey. “A focus on policies that will enable builders to construct more homes will help tame inflation by working to achieve a healthy supply-demand balance in the marketplace, move housing and the economy to higher ground and ease the nation’s housing affordability crisis,” Huey added.