Home construction should be policy priority, not buyer aid: economist

Homebuilder confidence, meanwhile, is plunging. The NAHB/Wells Fargo Housing Market Index (HMI), a gauge of how builders are judging the current outlook, has slipped consistently in recent months, falling again in October as sales expectations dimmed.

Yaros described the housing affordability crisis as a state and local issue rather than a federal one, although the federal government can also partner with states and localities to help improve zoning and laws around buildable lots.

And he cautioned that focusing on programs to spur homebuying could worsen the supply-demand imbalance at a time when he said construction should be the core government focus.

“Housing affordability is going to really be top of mind. And we’re probably going to see a lot more proposals that will support the demand side, which is not what you want at this time,” he said.

“You’ll see a lot of proposals, I think, on providing downpayment assistance – and yeah, that does help, but it just drives up demand. And if supply is limited, all that bleeds into is higher prices, which then sets people back further in terms of affordability.”