Pulte argues Fed can boost housing affordability by lowering mortgage rates

In the context of the ongoing housing affordability crisis in the United States, significant economic events have unfolded since mid-2021. In that time, the yield on the 10-year Treasury rose sharply, crossing 4.49% in the months leading up to July 2025. Meanwhile, mortgage rates skyrocketed from less than 3% in 2021 to above 7% by late 2023, leading to a dire situation for many prospective homeowners. Monthly mortgage payments, while they might benefit from lower interest rates, do not account for other mounting costs such as property taxes and insurance, both of which continue to rise alongside property values, severely impacting overall affordability. Furthermore, the Atlanta Federal Reserve’s affordability index revealed that the affordability crisis reached historic lows in this period, highlighting the gravity of the situation. In the backdrop of the Federal Reserve's aggressive monetary policy and an increase in asset purchases, rising home prices were directly linked to these financial strategies. As the Fed targeted lower federal funds rates, it inadvertently contributed to skyrocketing home prices that quintupled between 1985 and 2023, while median household income only saw a 241% increase. This disparity has inevitably led to challenges for potential buyers, with an increasing average age for homeowners as many are priced out of the market. Discussion around the effectiveness of the Federal Reserve's policies has become contentious; many believe that simply cutting rates will not resolve the underlying issues of inflation and high federal deficits that exacerbate housing costs. Ultimately, the argument posited by industry figures, such as Pulte, that lowering mortgage rates alone would improve home affordability overlooks a complex interplay of factors that perpetuate the current crisis. The public discourse suggests that if policymakers are genuinely invested in making housing affordable, targeted strategies aimed at reducing monetary inflation and controlling federal deficit growth would be the necessary steps to follow.