Barr, A Long-Term View on the Costs of Shelter

AI desk brief

Fed Governor Barr backed last week’s policy-rate increase and said further adjustments are likely needed to bring inflation back to 2% in a timely fashion. He said growth is strong, the labor market is solid, but inflation remains above target and risks to price stability have increased; he also cited tariffs, Middle East conflict, Russia’s war on Ukraine, and AI-related investment demand as sources of upward price pressure.

On housing, Barr said affordability has deteriorated sharply: the Atlanta Fed’s homeownership affordability index fell to 68 in July 2026, its lowest in 21 years, while estimated U.S. housing supply shortfalls run roughly 2 million to 5.5 million units. He argued higher home prices and mortgage rates are keeping ownership out of reach, with constrained supply and zoning/permitting rules helping drive the shortage.