“Housing affordability is the number one issue I’m hearing about from my constituents.”

“We need the Fed to start cutting. Because like the rent, interest rates are too damn high.” 

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WASHINGTON – Today in a House Financial Services Committee, Congresswoman Ayanna Pressley (MA-07) grilled Federal Reserve Chairman Jerome Powell, urging him to cut interest rates to boost home affordability and construction of affordable housing. In her line of questioning, Rep. Pressley highlighted the negative impact of high interest rates on mortgage prices and housing construction and discussed the need to lower interest rates.

Footage of the exchange with Chair Powell is available here, and a transcript is below.

Transcript: Rep. Ayanna Pressley Urges Powell to Cut Interest Rates to Boost Housing, Home Affordability

House Financial Services Committee

March 6, 2024

REP. PRESSLEY: Due to the Fed’s aggressive interest rate hikes, mortgage rates have surpassed 7%, rising to 20-year highs, leaving many creditworthy and mortgage-ready homebuyers without a path to homeownership. This is a problem for everyone. It’s an urban issue. It’s a suburban issue. It’s a rural issue.

Chairman Powell, I welcomed the decision of the Fed to pause rates at the end of last year, but for families in my district and across the country, that is not enough. We need the Fed to start cutting.

Because like the rent, interest rates are too damn high. 

Chairman Powell, you’ve previously indicated that the Fed may cut rates this year. What would you expect the impact of lowering interest rates to be on the housing market specifically, including the rental, purchase, and construction market?

CHAIR POWELL: So, we know that higher rates, of course, have slowed down the rate of activity. So if at such time as we start to lower interest rates, housing market will pick up broadly across new home construction and new home sales. The number, as you know, many, many households are in very low-rate mortgages, and they really can’t sell because they’d have to refinance into a high-rate mortgage. That’ll go away over time. So ideally, the housing market would go back into a more normal phase, but one with lower inflation in the broader economy.

REP. PRESSLEY: Right. So just to further reiterate that, you know, interest rate cuts would have a great benefit.

Just yesterday, actually, I met with a number of representatives from state housing finance agencies from throughout the country. And they were talking about the barriers to affordable housing projects, given the current interest rate environment. Obviously, higher interest rates have raised costs for affordable housing developers, and many of them have chosen to slow down or halt construction entirely. So fewer homes are being built, which means fewer people are being housed.

So given that we already – which you agree – so given that we already had a massive shortage of affordable housing supply prior to the pandemic, when interest rates were below 2%. The current rate, 5.5% rate, has been devastating, and the price of homes across the country have remained stubbornly high.

It’s clear the current state of our housing market is impacting everyone and disproportionately hurting those who need stability the most. Does this concern you?

CHAIR POWELL: So, our job is to do price stability and maximum employment. We don’t target the housing market, and we’re doing our jobs. That’s what we’re doing. It’s not something we want to see, but this is the path to restoring price stability.

[cross talk]

REP. PRESSLEY: But does it concern you, Chairman Powell?

CHAIR POWELL: Does it concern me?

REP. PRESSLEY: Yes. Fewer homes are being built, so fewer people are being housed.

CHAIR POWELL: This is the job we’ve taken on.

REP. PRESSLEY: Alright, well, it concerns me greatly.

Chairman Powell, the Fed’s interest rate hikes have not been sufficient in addressing housing inflation. Do you agree that we need a more robust fiscal response to increase the supply of affordable housing and to lower costs nationwide?

CHAIR POWELL: We don’t take opinions – we don’t express opinions on things like that. I will say that there is a structural housing shortage in the United States. And that’s really the longer-run problem. The problem with high interest rates is a short-run problem. The longer-run problem is lack of supply.

REP. PRESSLEY: Well, that’s why it is critical that Congress pass legislation, appropriations bills, that will make those necessary investments in housing for all.

You know, given the way that Ranking Member Waters fought for $150 billion investment in housing in Build Back Better, I know on this side of the aisle, that my colleagues and I are ready and waiting for the Republican majority to take housing inflation seriously.

Housing affordability is the number one issue I’m hearing about from my constituents. Families in my district and throughout this country need relief now.

I truly hope the Fed listens to them and cut interest rates. Thank you. I yield.

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