CNN
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As President-elect Donald Trump prepares to take office this month, he faces a very different housing market than during his first term.
The sharp decline in housing affordability over the past four years has pained many Americans – Trump wins US presidential election part on the back Dissatisfaction with the economy.
Now Trump is a billionaire Real estate developers themselves face a housing dilemma: Mortgage rates are not falling, and home prices are expected to continue rising in the coming years. Many economists estimate that this year’s housing market will be no different than the frozen housing market of past years. At the same time, many of Trump’s proposed policies, including tariffs and mass deportations, could exacerbate America’s housing affordability problem.
When Trump left office in January 2021 amid the pandemic, the most popular home loan option, the 30-year fixed mortgage rate, was just under 2.8%. last week, is 6.91%. That means people who borrowed money to buy a home now have to pay hundreds or even thousands of dollars more each month than they would have paid for the same home four years ago.
The house price is also rose sharply since then. According to the S&P CoreLogic Case-Shiller Home Price Index, national home prices rose 37% from January 2021 to October 2024 (the latest data available).
“I don’t see any reason why the housing market is going to get better this year,” said Jim Parrott, a nonresident fellow at the Urban Institute and a former senior adviser to the National Economic Council.
Trump has not shared official policy plan The campaign aimed to improve housing affordability, but Trump-Vance transition spokesman Taylor Rogers said in a statement that Trump will end the housing affordability crisis during his upcoming term.
“President Trump will make good on his promise to make housing affordable again by defeating historic inflation and lowering mortgage rates,” Rogers said. “President Trump will ban mortgages to illegal immigrants who drive up home prices. President Trump will end the housing affordability crisis by eliminating federal regulations that drive up housing costs, opening up some federal lands to ultra-low taxes, and enacting regulations that will cut the cost of new homes in half.
Trump has often discussed how regulations are adding heavy costs to his real estate development projects. During the campaign, he promised to reduce regulations on homebuilders, which could increase the sticker price of new homes. 2021 study A survey by the National Association of Home Builders found that adjustment fees accounted for $93,870 of the final price of a typical new home. At that time, the average price of a home was $394,300. As of November, that number was $484,000, according to the U.S. Census Bureau.
However, many of these regulations are the result of local laws that Trump promised not to interfere with during his first term. in a 2020 Column In the Wall Street Journal, Trump and then-Housing and Urban Development Secretary Ben Carson vowed to “protect America’s suburbs” by supporting local single-family zoning laws that critics say often block new affordable housing. construction.
The U.S. housing problem is partly due to years of chronic underconstruction following the 2008 housing crisis and the Federal Reserve’s recent actions to raise interest rates to curb historic inflation. Many of Trump’s policy proposals threaten to deepen these problems.
“A lot of what Trump is saying points in the wrong direction when it comes to housing prices,” Parrott said.
Parrott points to Trump’s vow of mass deportations May hinder housing construction.
While an influx of immigrants may drive up demand for housing in areas where housing is already scarce and may intensify competition for housing, it could also help expand housing supply, given the outsized role of undocumented immigrants in the U.S. construction industry.
Some of Trump’s other policy proposals could also increase the cost of buying a home.
“The main driver of affordability is really mortgage rates,” said Lawrence Yun, chief economist at the National Association of Realtors. “If mortgage rates go from 7 percent now to closer to 6 percent or lower, that will have a huge impact on affordability.”
Despite Trump’s transition pledge to lower interest rates, mortgage rates track the 10-year Treasury note, which trades in part on views of the future direction of inflation. Some economists warn Trump threatens broad tariffs May reignite inflationcould lead to higher interest rates and therefore higher mortgage rates.
Higher interest rates also hurt homebuilders’ ability to expand new home construction.
The first Trump administration tried and failed Take Fannie Mae and Freddie Mac privateLending giant that insures 70% of U.S. mortgages. If he renewed the fight, it could also lead to higher mortgage rates, Yun said.
Efforts to address the U.S. housing crisis could become a pressing issue for voters in the upcoming election, Cowen financial policy analyst Jaret Seiberg wrote in a note to clients last month.
“Our view is that Republicans need to address entry-level housing inflation to win future elections,” Seiberg wrote. “We believe entry-level housing inflation opens the door for Democrats to do well in the midterm elections and give them an advantage in the 2028 presidential election. We believe Republicans take this risk seriously. That’s what we expect to act on reason.
However, NAR’s Yun believes that some of the pressure currently facing the U.S. housing market may start to ease on its own.
Homes are staying on the market longer, which means bigger price cuts — and homes for sale — could be coming soon Rose December was the fourth consecutive month, according to NAR data. Many homebuyers are coming to terms with the fact that mortgage rates around 6% are likely here to stay and are no longer delaying their home purchases.
“I think the low point in home sales is basically over in 2024,” Yun said. “More people will be able to successfully buy, more people will be on the market to list their properties. I think there will be more changes in the real estate market this year.