US to provide $100M over 3 years to support affordable housing

The US government will provide an additional $100 million over the next three years to support the financing of affordable housing in the nation.

Treasury Secretary Janet Yellen will announce the new measures on Monday in a speech in Minneapolis, Minnesota, the Treasury Department said in a statement.

Yellen will call for US state and local housing finance agencies to provide higher interest rate predictability to borrowing and the Federal Home Loan Banks to increase their spending on housing programs.

The Treasury chief, in addition, will provide an update to the Capital Magnet Fund (CMF) Program to provide greater flexibility to Community Development Financial Institutions (CDFIs) and non-profits that finance affordable housing.

The Treasury Department's CMF Program offers grants to CDFIs and non-profit organizations to finance affordable housing.

In fiscal year 2023, the CMF made over $320 million in awards projected to leverage more than $11.1 billion in resources to support affordable housing, according to the statement.

"Awardees planned to develop more than 32,700 affordable housing units, with half of awardees planning to invest a portion of their award to support housing in rural areas," it added.

The Treasury Department invested more than $8.57 billion in community lenders during the coronavirus pandemic to support lending to small businesses, consumers and affordable housing projects through its Emergency Capital Investment Program (ECIP), said the statement.

"Through the end of 2023, ECIP participants invested $1.2 billion in 433 affordable housing projects across the country," it added.

Yellen's comments will come just days before President Joe Biden and former President Donald Trump will face off Thursday in the first presidential debate of the 2024 general election as Americans struggle with high inflation, rising rental prices and higher borrowing costs due to the Federal Reserve's monetary policy tightening.

"Thanks to President Biden’s economic plan, the American economy is strong and resilient, with robust economic growth in recent quarters," Yellen later said during her speech. "The labor market is remarkably healthy, with low unemployment rates, rising real wages and a bigger share of working-age Americans in the workforce than before the pandemic."

The Treasury chief noted that although inflation is down almost two-thirds from its peak, prices for key household expenses like health care, energy and housing are still too high.

On health care, the Biden administration capped the cost of insulin for seniors, enabled Medicare to negotiate prices for key prescription drugs, required pharmaceutical firms to pay for raising prices faster than inflation and cut health insurance premiums for millions of Americans, said Yellen.

On energy, the administration used the Strategic Petroleum Reserve and put in place a price cap on Russian oil to help keep global energy markets well-supplied, she added.

"On housing, I expect that shelter inflation will moderate, and we see certain positive signs, such as the fact that total units under construction remains at a 50-year high," she said.

Yellen stressed that the US faces "a very significant" housing supply shortfall that has been building for a long time and added that "this supply crunch has led to an affordability crunch."

The Treasury head strongly encouraged more state and local governments in the US to take additional action to address the housing shortage in the nation.