Economic incoherence in national housing policy

From The housing market just slid into a full-blown correction, says top economist Mark Zandi by Lance Lambert.  Emphasis added.  

The Fed won't be appeased with simply slowing home sales, Zandi says. It will also want home construction to slow. Elevated home construction, which this year hit its highest level since 2006, has put upward pressure on everything from lumber to steel to kitchen tables. If the housing market heats back up before inflation has been tamed, Zandi says, the Fed would simply push mortgage rates even higher. Already, over the past five months the average 30-year fixed mortgage rate has spiked from 3.11% to 5.1%.

I have no particular dispute with their argument.  Just noting the implication that the Federal government is working to reduce the volume of home construction.

Meanwhile, at the State and Local level, it is an article of faith that there is a crisis of unaffordable housing.  To which the solution should be to turn on the construction spigots.  If you want lower priced housing, increase production (and reduce interest rates and ease the regulatory and zoning process, etc.).  It is a tried and tested solution; in order to reduce price, increase supply.  

In states across the nation, hard left policy in cities is to subsidize affordable housing in order to make it affordable to key constituents (and line the pockets of local politicians.)

The government is both constricting supply (the Fed) and subsidizing demand (affordable housing policies).  Which is, of course, economically incoherent.  Once again:

Click to enlarge.