Fed president: Underbuilding, not the Fed, broke the housing market

Minneapolis Fed President Neel Kashkari has countered the notion that the Federal Reserve's interest rate policies are responsible for challenges in the housing market. In a conversation with Bloomberg, he emphasized that the fundamental issue lies in a structural underbuilding of the necessary housing units, attributing this shortfall to local regulations acting as a hindrance to supply expansion.

Addressing concerns about mortgage rates potentially limiting a generation's access to homeownership, Kashkari highlighted the delicate balance in market dynamics. He explained that when individuals refrain from selling their homes due to being tied to low mortgages, it not only reduces resale supply but also eliminates one potential buyer from the market. Despite these housing market concerns, Kashkari maintained his stance that the Federal Reserve's enduring legacy would be defined by its proactive response to inflation rather than its impact on housing markets.