Fed Presidents Say Housing Fix Requires More Supply, Not MBS

On Jan. 9, 2026, Atlanta Fed President Raphael Bostic and Richmond Fed President Thomas Barkin publicly questioned a White House initiative to use federal housing finance resources to buy mortgage-backed securities as a primary tool to ease housing affordability. The administration announced a program with an expressed goal of $200 billion in MBS purchases, and Federal Housing Finance Agency Director Bill Pulte told reporters the program had begun with $3 billion in purchases, though he declined to specify timing for the remainder.

Bostic, speaking on Florida public radio station WLRN, cautioned that financing is only one component of affordability. He said financing is “one piece” of housing affordability but added that “a lot of the housing affordability challenges are about more than just financing,” pointing to persistent supply-and-demand imbalances in major markets. He also noted that housing is central to family stability and that “we definitely need to get everything in order if we want to make sure that people can buy housing.”

Barkin, speaking to reporters in suburban Baltimore, echoed that emphasis on physical supply, saying the policy answer “is on the supply side” when it comes to making housing more affordable. Their comments followed the administration’s public framing of the MBS purchases as a way to lower borrowing costs that have been pushed up amid the Fed’s tighter policy over recent years.

The proposed MBS purchases are being executed by federal housing finance institutions rather than the Federal Reserve. In effect, large-scale purchases of mortgage bonds are intended to push down longer-term yields by increasing demand for securities tied to home loans, a mechanism similar in spirit to prior central-bank asset-buying programs. In the near term, the announced buying could reduce mortgage spreads and put modest downward pressure on long-term interest rates; markets will be watching volumes and timing closely after the initial $3 billion disclosed by the FHFA.

But monetary economists and the two Fed presidents warned that lower rates do not automatically translate into more homes for sale. In markets where supply is constrained by zoning rules, slow permitting, land scarcity and elevated construction costs, cheaper financing can increase demand and prices without materially expanding inventory. The result can be limited gains in affordability for moderate- and low-income buyers.

The tension exposes broader policy trade-offs. Using housing-finance tools to influence mortgage rates raises questions about the boundary between fiscal or administrative interventions and traditional monetary policy, as well as the long-run efficacy of demand-side measures absent supply reforms. Analysts say durable improvements in affordability will require coordinated changes in land-use regulations, expedited permitting, targeted subsidies for construction, and investments in infrastructure to unlock buildable land.

By highlighting supply as the central bottleneck, Bostic and Barkin framed the debate over how to pair any short-term rate relief with structural reforms that increase housing starts and listings—steps that, over time, are more likely to stabilize prices and broaden access to homeownership.