Federal Reserve Governor Thomas Barkin stated on Tuesday that while lower mortgage rates may boost housing demand, they fail to address the fundamental supply shortage—the primary driver of today's elevated home prices.
"If mortgage rates drop, more people will want to buy homes, and houses would sell out the next day," Barkin remarked. "The way to reduce prices is to build more housing."
He emphasized that current high prices likely still reflect supply constraints stemming from the 2007–2009 financial crisis. "Housing supply remains restricted, while demand has grown," he added.
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