Obama administration official says supply issues need to be addressed if we want housing affordability

See Biden Administration Weighs Move to Trim Mortgage Costs as Home Prices Rise: Mortgage industry officials say insurance cut for FHA-backed loans would help entry-level buyers; Republicans say it could increase prices by Andrew Ackerman of The WSJ. Excerpts:

"The Biden administration is weighing a move to trim mortgage costs for first-time and lower-income buyers, a bid to boost affordability when average home prices are at an all-time high.

President Biden’s affordability push has so far largely focused on steps to ease constraints on the supply of new homes, a primary driver of a rapid run-up in home prices in recent years. Steps to ease costs on certain borrowers could help modestly but more meaningful steps to address affordability are likely to come only from increased supply, housing experts said.

“If you only lower pricing without addressing the supply-side problem, you’re not going to meaningfully help affordability over the long term,” said Jim Parrott, a former Obama administration housing adviser who is now an industry consultant."

"The FHA program is geared toward borrowers who tend to have lower credit scores and who have little cash for down payments, such as first-time home buyers. Compared with other federally backed mortgage programs, the FHA program tends to disproportionately cater to minority borrowers. The FHA doesn’t make loans, but insures lenders in case of default on mortgages with down payments of as little as 3.5%. Borrowers must pay for the insurance."