Home builders operate on borrowed money so high interest rates push up their costs significantly. Worse still, with rates expected to slowly come down they’ll be selling into a market where house prices are likely lower (in real terms). Neither are really connected to how hard it is to build housing (though yes it’s too hard).
Does anyone have a good explanation of why the Federal Reserve isn’t able to have lower interest rates for supply creation activities? It appears that would be a useful tool that would work in favor of their inflation and employment mandate.
Economy is doing "good" so there is no need. And there is still large risk of inflation coming back. So it is better to keep rates higher. There is yet no real need to lower rates. So better to wait and see.
The idea is that it could help lower inflation as shelter is a large portion of core CPI. It’s not about lowering the prime rate, but having a lower rate for creation of supply, which would exclude all services (80% of the economy).
