DONALD TRUMP’S HOUSING MARKET DILEMMA
President Donald Trump has admitted there is a “conflict” between his promise to improve affordability in the U.S. housing market, especially for first-time homebuyers, and his desire to keep the current record-high levels of homeowners’ equity high.
“I don’t want to knock those numbers down, because I want them to continue to have a big value for their house. At the same time, I want to make it possible for young people out there and other people to buy housing. In a way, they’re at conflict,” he said during a speech at the Oval Office on December 18.
Experts say that a chronic lack of housing inventory is at the heart of the current affordability crisis, which can only be solved by building more new homes and unlocking supply in the parts of the country where people want to live.
The country would need to add between 3 and 4 million additional homes beyond normal construction to address the current shortage in the country and boost affordability, according to researchers at Goldman Sachs.
This new inventory should finally push down prices, which are still rising, though at a much slower pace than during the pandemic. As of November, the median sale price of a typical U.S. home was $433,261, up 0.7 percent from a year earlier and roughly $100,000 more expensive than in 2021, according to Redfin data.
“In other words, you create a lot of housing all of a sudden, and it drives the housing prices down,” Trump said last month.
“So I want to take care of the people that have houses that have a value to their house that they never thought possible, that have sort of made them wealthy and happy, and especially in their later years. Got to be careful with that. I want to keep them up,” he added.
“At the same time, I want to make it possible for people to go buy houses.”
Is There a Way Trump Could Solve This Dilemma?
Daryl Fairweather, chief economist at Redfin, thinks that Trump could solve the dilemma he is facing in the housing market, but this would require “prioritizing dense housing supply—especially entry-level homes—while avoiding policies that hurt livability.”
That would involve increasing the supply of “missing middle housing like townhomes, duplexes and triplexes,” Fairweather told Newsweek.
This additional stock would “lower the entry cost of becoming a first-time homebuyer without threatening the values of existing single-family homes,” the economist explained.
“This is because missing middle housing divides the high cost of land across multiple households, creating a significantly lower entry price than a detached house on the same lot,” she said.
“Higher density could increase the value of existing single-family homes in a neighborhood by increasing the amount of restaurants, shops and other highly valued amenities, which would increase the desirability of all homes in a neighborhood.”
For Joel Berner, senior economist at Realtor.com, Trump could also solve the dilemma “by keeping inflation—and thereby mortgage rates—low,” he told Newsweek.
As of the week ending on December 31, the nationwide average 30-year fixed-rate was 6.15 percent, down from 6.91 percent a year earlier, according to Freddie Mac.
A majority of experts expect mortgage rates to end the year around the 6 percent mark.
“Rates will likely remain range-bound in 2026, although overall, the hope is that the trend will continue downwards,” Sarah DeFlorio, vice president of Mortgage Banking at William Raveis Mortgage, told Newsweek.
Another way Trump could lower costs for first-time homebuyers while keeping home values from plunging would be by “removing tariffs, especially on home construction materials,” according to Berner, who described this move as “a slam dunk.”
This way, he said, “consumer prices come down and artificial barriers to business are removed.”
Which Goal Is Trump More Likely To Achieve?
Without major supply increases—which are not on the horizon—“the market is more likely to protect homeowner equity,” Fairweather said.
Affordability in the U.S. housing market will only improve when the country starts building more homes “in the places people want to live,” she said.
Berner said that the U.S. housing market is moving in the direction of greater affordability “irrespective of any policy initiatives, so it’s more likely that prices will hold steady.”
If incomes continue to grow faster than home prices, as experts expect will happen this year, “we can land at a relatively happy place in the middle,” Berner said.
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2026-01-10T10:13:46Z
