President-elect Donald Trump has vowed to address the housing affordability crisis, but experts warn that some of his policies may worsen the issue.

As Trump prepares to take office, he faces a housing market far more challenging than the one during his first term. Over the past four years, home affordability has plummeted, driven by soaring mortgage rates and rising home prices. Trump’s campaign capitalized on widespread economic dissatisfaction, making housing a key promise of his platform.

The Current Housing Market

When Trump left office in January 2021, the average 30-year fixed mortgage rate was under 2.8%. Today, it stands at 6.91%, causing monthly mortgage payments to surge for homebuyers. Meanwhile, national home prices have skyrocketed, climbing 37% from January 2021 to October 2024, according to the S&P CoreLogic Case-Shiller Home Price Index.

Jim Parrott, a senior adviser at the Urban Institute, doubts that conditions will improve soon. “I see little reason the housing market will get better this year,” he said.

Trump’s Housing Policies

While Trump has yet to release a detailed housing plan, his transition team claims he will end the affordability crisis. Taylor Rogers, a spokesperson for Trump’s team, outlined key strategies, including:

• Reducing mortgage rates by tackling inflation.
• Cutting federal regulations that increase housing costs.
• Opening federal land for large-scale housing construction with low taxes and minimal regulations.

However, critics argue that some of these policies, like eliminating mortgages for undocumented immigrants and mass deportations, may exacerbate the crisis.

Rising Costs and Regulatory Challenges

Homebuilders face steep costs due to regulations, which added $93,870 to the price of a new home in 2021, according to the National Association of Home Builders. These costs have risen alongside the average home price, which is now $484,000.

Trump’s campaign promises to cut these regulations. However, his earlier commitment to protect single-family zoning laws, which critics say hinder affordable housing development, complicates his ability to address the crisis effectively.

Impact of Mass Deportations and Tariffs

Trump’s plan for mass deportations may shrink the labor force in the construction industry, reducing the housing supply. Additionally, broad-based tariffs could fuel inflation, keeping interest rates high and making mortgages even more expensive.

Mortgage rates, which depend on 10-year Treasury yields and inflation expectations, are unlikely to fall if tariffs drive up costs. Higher rates also hinder homebuilders from expanding housing supply, deepening the affordability crisis.

Is Relief in Sight?

Despite these challenges, some economists see signs of relief. According to the National Association of Realtors (NAR):

• Pending home sales rose for four consecutive months in 2024.
• Homes are staying on the market longer, which could lead to price cuts.
• Buyers are adjusting to mortgage rates around 6%, leading to more activity in the market.

Lawrence Yun, NAR’s chief economist, believes 2024 marked the low point in home sales. “More people are coming onto the market to list their properties,” Yun said. “I think there will be more movement in the housing market this year.”

What Lies Ahead

Trump’s approach to the housing crisis could shape voter preferences in future elections. According to Jaret Seiberg, a financial policy analyst at Cowen, addressing entry-level housing affordability is crucial for GOP success in 2028.

Whether Trump’s promises will translate into meaningful relief for Americans remains to be seen. However, the pressing need for solutions will undoubtedly keep housing affordability at the forefront of the national agenda.

Key Takeaways:

• Mortgage rates have nearly tripled since 2021, causing financial strain for buyers.
• National home prices have jumped 37% in just three years.
• Trump’s policies, including regulation cuts and land development, aim to tackle housing costs but face criticism for potential drawbacks.
• Economists anticipate modest improvements in the housing market this year.