Treasury Secretary Janet Yellen has announced several measures aimed at boosting the US housing supply, as families grapple with rising home prices and mortgage rates. Speaking in Minneapolis, Yellen introduced a $100 million fund designed to finance affordable housing projects over the next three years. This initiative, although modest, is seen as a response to the severe housing shortfall affecting millions of Americans.

The Treasury Department's new fund is expected to support the financing of thousands of affordable housing units. Yellen emphasized the administration's commitment by calling on Federal Home Loan Banks to increase their support for housing programs. She urged these government-sponsored enterprises, which already devote 15% of their net income to housing programs, to raise their commitment to at least 20%. This increased contribution would have resulted in nearly $2 billion more for housing over the past five years.

Decades of undersupply have exacerbated the housing crisis. Moody's Analytics estimated that the US is short of 1.8 million homes, while a report by the Joint Economic Committee's Republican staff placed the shortfall as high as 20 million. The median sales price for new homes has risen by over 40% since April 2020, with mortgage rates more than doubling, keeping many potential sellers off the market and further limiting supply.

Yellen's announcement comes at a crucial time, just before the presidential debate between President Joe Biden and former President Donald Trump. Inflation, a key concern for voters, has seen fluctuations, with housing costs persistently high. The Biden administration has previously floated various proposals to tackle housing affordability. These included a $5,000 tax credit for middle-class first-time homebuyers and a $10,000 credit for those selling their starter homes. However, critics argue these measures might backfire by increasing demand and further driving up home prices.

Housing costs are not just an economic issue but a significant political one, particularly in a presidential election year. For instance, the median home sales price hit an all-time high of $419,300 recently. In states like Arizona, Georgia, and Wisconsin, home prices have risen by more than the national average of 46.5% since 2020. The Biden administration has highlighted its efforts in providing rental assistance and promoting new construction as solutions to the housing crunch.

Yellen's visit to Minneapolis focused on the city's Family Housing Expansion Project, which includes 84 units across 16 buildings. She underscored the importance of affordable housing in maintaining health and well-being, with local policymakers like Sen. Tina Smith and Mayor Jacob Frey echoing her sentiments. Frey pointed out Minneapolis's success in leveraging federal policies to promote the construction of multifamily housing, essential for increasing the affordable housing stock.

The National Low Income Housing Coalition reported a shortage of over 7 million affordable homes for extremely low-income families, with no state or county able to meet this need. The Biden administration continues to push for additional measures, such as the Low-Income Housing Tax Credit and a tax credit for first-time home buyers as part of Biden's budget proposal aiming to build over 2 million homes.

The administration's focus on housing extends to corporate practices, with Biden accusing landlords of keeping rents high despite falling costs. The President's economic strategy also includes broader infrastructure investments, highlighted by various cabinet members like Secretary of Housing and Urban Development Adrianne Todman and Secretary of Transportation Pete Buttigieg touring the country to promote these initiatives.

As housing costs remain a significant concern for everyday Americans, the upcoming presidential debate will likely feature discussions on these new housing initiatives and their potential impact on the economy and voters.