An Affordable Housing Conversation with Council of Federal Home Loan Banks Policy Economist John Comeau

John Comeau: Mortgage rates are central to affordable homeownership. During the first eight months of 2025, the 30-year fixed-rate mortgage averaged 6.77 percent and while mortgage rates have moved lower this fall, rates remain more than double the 3.04 percent average we saw in 2020–2021. The rise in mortgage rates has left many homeowners “locked in” with low-rate mortgages that discourage moves, limit labor mobility and restrict the supply of homes for sale.

FHLB Dallas: Beside mortgage rates, what else is influencing housing affordability?

John Comeau: Builders are facing a terrible trifecta of high interest rates, high land prices and high construction costs (materials and labor). New home construction has been below the long-run average for 165 of 200 months through July 2025, resulting in new home construction that is insufficient to meet housing demand. At the same time, insurance premiums, renovation costs and property taxes have all climbed—outpacing wage growth and putting affordable homeownership increasingly out of reach.

Nationally, home prices in the U.S. surged by 54.9 percent from the first quarter of 2020 to the first quarter of 2025. While national prices increased, prices decreased in some markets due to oversupply, insurance costs, disaster risks and other local economic factors. A June 2025 report by the National Association of Home Builders found that nine of the 10 U.S. markets with the largest home price declines from 2020 to 2025 were located in Louisiana and Texas—within the FHLB Dallas District—where housing markets have been under pressure from rising insurance costs and disaster-related risks.

FHLB Dallas: Our District includes areas prone to hurricanes, tornadoes, floods and fires. What significance does that have on the housing market?

John Comeau: Insurance premiums have surged over the last five years due to losses from extreme weather. This has led to an increasing number of borrowers struggling, not due to rising principal and interest payments, but due to rising taxes and insurance costs. This underscores the need for collaborative solutions—with the FHLBanks working alongside lenders, community partners and state, local and federal governments—to address the challenges driving today’s housing affordability crisis. 

FHLB Dallas: You’ve talked about the challenges the housing market faces and how several banks in the FHLB System are addressing this challenge. What are we getting right here at FHLB Dallas?

John Comeau: The daily work of the FHLBanks has a positive impact on housing markets. By providing stable and cost-effective liquidity to lenders, the FHLBanks ensure their members have the funds necessary to support homebuyers and affordable housing developers. On top of this, each FHLBank operates targeted programs and partnerships designed to meet the unique needs in their communities. At FHLB Dallas, the Homebuyer Equity Leverage Partnership (HELP) provides eligible first-time buyers with up to $25,000 in down payment and closing assistance, which can be the difference in making homeownership achievable.

Affordability isn’t just about building new homes—it’s also about protecting the homes we already have. Through the FHLB Dallas FORTIFIED Fund, you help income-qualified homeowners install storm-resistant roofs that can endure hurricanes, high winds, hail and other severe storms—ensuring homes stay safe, resilient and part of the affordable housing supply.

In addition, FHLB Dallas provides grants for disaster recovery and critical home repairs that provide support that is essential to maintaining the existing stock of affordable homes—helping families stay in place and helping communities remain resilient.

FHLB Dallas: We just announced our Affordable Housing Program (AHP) grants for 2025 and awarded $73.5 million through our members for affordable housing projects. How is this and other programs having an impact?

John Comeau: The $73.5 million in AHP grants FHLB Dallas announced  recently will expand housing affordability and create or rehabilitate more than 3,700 housing units in the FHLB Dallas District and beyond. The awarded projects, delivered in partnership with 26 member institutions, reflect the strong commitment of FHLB Dallas to support the community, leveraging member capital to deliver tangible results.

Alongside AHP, the Mortgage Partnership Finance® (MPF®) Program is a powerful tool that FHLB Dallas uses to support affordable housing. By allowing members to sell qualifying mortgages to the FHLB Dallas, the program helps members manage balance sheet risk, free up capital and expand lending to homebuyers in their community.

The FHLBanks are essential partners in advancing housing affordability. The FHLBanks’ reliable liquidity and funding programs that preserve and strengthen the existing housing stock—including at FHLB Dallas—play a vital role in addressing today’s affordability challenges. As economic conditions evolve, the continued collaboration among FHLBanks, lenders and federal, state and local partners will be key to ensuring that homeownership and affordable rental housing remain within reach of families across the country.