Fed Official Sounds Warning on Housing as Affordability Hits 21-Year Low

A top Federal Reserve official has delivered a sobering assessment of the U.S. housing market, warning that a severe housing shortage is driving up shelter costs at a time when the central bank may be forced to raise interest rates even further.Speaking at an event in Chicago on Wednesday, Fed Gov. Michael S. Barr highlighted the growing disconnect between everyday Americans' earnings and housing expenses.“By a variety of measures, high rents and high home prices, relative to income and savings, have made shelter increasingly unaffordable for many Americans for a number of years,” Barr told attendees at a housing summit hosted by the Chicago Fed.Barr noted that an Atlanta Fed index tracking the affordability of homeownership, as measured by the ratio of home prices to incomes, hit a 21-year low this summer. And that's before factoring in the impact of higher mortgage rates, which have been climbing since the spring and exceeded 7% on Thursday, according to Freddie Mac."Real, constant-quality house prices are at a record high in many places around the country," said Barr. "This combination of high prices and high rates puts homeownership out of reach for many families."Barr cited a ...