Members press Powell on housing: high rates, supply shortage and eviction impacts on communities

Several members used the hearing to press Chairman Powell on housing affordability, evictions and whether the Fed's policy approach is worsening supply shortages.

Representative Lieb (MI) and others described research showing high eviction prevalence among Black women and flagged long-term loss of Black homeownership in Michigan. They asked whether Fed actions—especially higher interest rates—are eroding housing supply or deterring new construction.

Powell said the Fed cannot directly remedy structural housing shortages. He described two forces: a long-run shortage of housing supply that monetary policy cannot fix, and a short-run effect of higher interest rates that reduce housing activity. He said the best contribution the Fed can make is to restore price stability so rates can come down and finance conditions normalize. "Our policy will not be a driver of longer run housing supply," he said, while acknowledging that shelter metrics were one of the stickiest components of inflation and are now easing.

Powell explained how shelter is measured in inflation statistics—owner's equivalent rent and rents—and said the housing services component has begun to come down toward levels consistent with 2% inflation.

Lawmakers also asked about mortgage spreads and whether the Fed's runoff of mortgage-backed securities is contributing to elevated mortgage spreads versus Treasury yields. Powell said he did not view MBS runoff as a particularly large contributor; instead he pointed to broader cost pressures—insurance, labor, materials and land—that affect housing costs.

Powell acknowledged the acute local impacts—evictions, loss of homeownership in specific states—and said the Fed monitors housing and takes those effects into account when assessing the broader economic picture, but that structural housing policy is for elected officials to address.