The Biden administration is unveiling new initiatives to make affordable housing more accessible, amid soaring living costs driven by high interest rates and post-pandemic price hikes.

U.S. Treasury Secretary Janet Yellen is set to highlight these investments during a visit to Minneapolis. The plans include allocating $100 million through a new fund over the next three years to support affordable housing financing, expanding the Federal Financing Bank’s support for affordable housing, among other initiatives.

The focus on housing prices comes as the housing shortage becomes a growing concern in this year's general election campaign.

“We are facing a significant housing supply deficit that has developed over a long period,” Yellen will say in her prepared remarks for Monday afternoon. “This supply shortage has created an affordability crisis.”

Homebuyers and renters alike are experiencing climbing housing costs which surged after the pandemic. According to the Case-Shiller 20-City Composite Home Price Index, home prices rose by 46% between March 2020 and March 2024. A recent Treasury analysis indicated that over the past two decades, housing costs have been increasing more rapidly than incomes.

At the same time, the sale of pre-owned homes in the U.S. decreased in May for the third consecutive month. Rising mortgage rates and historically high prices have deterred many potential buyers during the traditionally busy real estate season.

For low-income Americans, data from the National Low Income Housing Coalition shows a national shortage of over 7 million affordable homes for more than 10.8 million extremely low-income U.S. families. The group notes that no state or county in the country allows a full-time minimum wage worker to afford a two-bedroom apartment.

The situation is reaching crisis levels in some areas. In Martha’s Vineyard, Massachusetts, housing costs have become a public safety concern, complicating efforts to hire and retain correctional officers and 911 dispatchers.

However, some economists predict that the housing crunch might not ease until the Federal Reserve reduces its key interest rate, which stands at 5.3%.

Sal Guatieri, senior economist at BMO Capital Markets Economic Research, stated on Friday that the housing market is unlikely to see substantial changes “until the Fed brings down policy rates.”

Diane Yentel, president, and CEO of the National Low Income Housing Coalition, acknowledged the White House’s efforts to prevent evictions and address the housing crisis, adding, “but there is much more work still to be done.”

Yentel emphasized the need for congressional action to “swiftly implement transformative and urgently needed housing investments. Only through a combination of administrative action and substantial federal funding can the country genuinely solve its affordable housing crisis.”

In her speech, Yellen will urge Congress to pass Biden's proposed budget, released in March.

The budget asks Congress to offer a tax credit for first-time homebuyers and includes a plan to construct over 2 million homes. It also proposes expanding the Low-Income Housing Tax Credit.

The Biden administration has taken other steps to increase housing supply, including initiating a multi-agency effort to encourage states and cities to convert more vacant office buildings into housing units, with billions of federal dollars available to aid these transitions.

In July 2023, the Department of Housing and Urban Development provided communities with $85 million to reduce barriers to affordable housing, such as zoning restrictions that in some areas have become obstacles to increasing the supply and density of affordable housing.