Skyrocketing housing costs may create even bigger problems for the Biden administration going forward than oil and food price spikes. That’s because there’s no clear end in sight for shelter inflation
But rising rents and housing prices will take time to fully cycle into the CPI measure. The increase in shelter costs in the inflation gauge has typically lagged rising prices by about 16 months in recent years, according to an— so the inflation headlines will probably get worse before they get better.
Housing advocates and industry lobbyists say the affordability crunch has reached crisis levels. More than 40 housing-related groups sent a letter to President Joe Biden on March 9 requesting that he convene a council on affordability made up of a “broad range of external stakeholders” and officials from seven different Cabinet departments.Mark Zandi
But there’s no quick fix. The main drivers of rising home prices are “land-use policies and permitting costs and zoning restrictions — that’s very much determined at the local level, and to influence that from the federal level is very difficult,” said Moody’s Analytics chief economist Mark Zandi.housing crisis we’re in has developed over the last decade, and it’s going to take a decade or two of consistent policy to get us out of this,” Zandi said.
Dietz said policies to reduce the cost of lumber — which has more than tripled since February 2020 — would make a difference, since 90 percent of new single-family homes are wood-framed. The rise in lumber prices over the last year alone has caused the average price of a new single-family home to increase by $18,600, according to NAHB. But the federal government isn’t helping: The U.S. in November, the latest development in a lengthy trade dispute over the import.
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