This article originally appeared in the January 2025 edition of MortgagePoint magazine, online now.
As 2025 dawns, the housing market and mortgage industry brace for a year of change. With a new incoming administration under President Donald Trump, the industry is preparing for how his shifting policies and priorities will impact everything from mortgage rates and affordability to the conservatorship of the GSEs.
For this year’s first edition, MortgagePoint surveyed a selection of economists and industry experts about topics ranging from the potential impact of tariffs and deportations on the building industry, how inflation may be impacted, first-time homebuyer affordability and access, and more. This year’s outlook reveals a complex interplay of factors likely to shape the housing market’s trajectory in the months and years ahead.
Molly Boesel, Principal Economist, CoreLogic
Q: What economic policies or changes are likely to be proposed or introduced by the Trump administration in 2025 and will have the most significant impact on the housing market, and why?
Policies that work to increase the supply of for-sale housing in 2025 would have the most impact on the housing market. Low for-sale supply in many parts of the country has kept home prices high, and housing affordability is at a near-record low. While interest rates in the 6% range play a part in low afford[1]ability, home price increases are also a driver of low affordability and create a barrier for new buyers. Home price increases increase monthly payments, but they also increase the amount of down payment a buyer would need to have.
Q: How do you expect interest rate policies from the Federal Reserve to influence mortgage rates, housing affordability, and demand in the coming year?
The Federal Reserve has lowered, and is expected to continue to lower, the federal funds rate, but this has had a small impact on long-term mortgage rates. Long-term mortgage rates are expected to remain in the 6% range for most of 2025, which does little to alleviate the owner “lock-in” effect that is one driver of limited for-sale housing supply.
However, lower short-term interest rates in 2025 would lower borrowing costs for homebuilders and could lead to an increase in residential construction.
Q: What demographic groups—such as first-time buyers, retirees, or investors—are likely to benefit or be challenged by the predicted market conditions?
First-time buyers, particularly young buyers, or those who haven’t been able to save money for a down payment, will continue to be challenged by housing market conditions. This is due to the rapid increase in prices in 2021 and 2022 and to inflation in other parts of the economy, including the rental market.
Renters in single-family properties saw an average of 32% rent increase from 2020 to 2024, and while rent increases slowed in the latter part of 2024, they did not decrease in most of the country.
Add to that price increases for other necessities and saving for a home would need to be put on the back burner for many households.
Another group that will be challenged in the predicted market conditions are current owners on a fixed income. Homeowners’ insurance premiums have surged over the last few years, and while estimates of the increase range some, the average is about 30% to 50% since 2019, and as much as 90%+ in areas with higher exposure to natural disasters. Unfortunately, as a result, some homeowners who were counting on relatively fixed homeownership expenses (excluding property taxes) over a 30-year period could be facing a payment shock they cannot afford (presuming they mortgaged a home with the 30-year fixed rate mortgage). This shock has been more significant in markets where insurance costs have surged.
Q: Do you expect demand for rental properties to rise or fall in 2025, and how might this affect housing developers’ strategies?
Demand for rental properties should remain strong in 2025, especially as the nation’s young adults form households. There are roughly 30 million 24- to 30-year-olds in the Unted States, and those forming households will most likely become renters, adding to rental demand.
In addition, a limited supply of for-sale housing has kept many renters in their rentals.
Jacob Channel, Senior Economist, LendingTree
Q: What economic policies or changes likely to be proposed or introduced by the Trump administration in 2025 will have the most significant impact on the housing market, and why?
Based on what Trump has said about his policies on the campaign trail and since becoming President-elect, tax cuts, deregulation, tariffs, and mass deportations seem like they would probably have the biggest impact on the broader housing market.
Tax cuts and deregulation are likely to be met with open arms by many in the mortgage/housing space. After all, if you owe Uncle Sam less money and have fewer hoops to jump through to do business, that hypothetically leaves you more money for investments and expansion. That said, history has shown, time and time again, that wanton deregulation usually does more harm than good. The last time the United States neglected to regulate its mortgage industry, we ended up with the largest financial crisis since the Great Depression. Lower taxes are nice, in concept, until you start to consider that they could drive both inflation and government deficits higher—two things that will likely result in increased interest rates. Not to mention, an underfunded federal government is going to have a much harder time intervening and stabilizing the economy should things go bad.
Tariffs will push prices for some of the goods used in home construction higher. My sense is that the broader home construction industry isn’t super worried about tariffs, but in an environment where housing costs are already as high as they are, I doubt consumers are going to be thrilled about any extra costs born of tariffs—even if some of those extra costs are for optional additions to their homes.
Mass deportation, on the other hand, are something that everyone should be worried about. Mass deportations would almost certainly severely disrupt the U.S. labor market and result in labor shortages in many industries, including construction. The scarcer the labor is, the more expensive it will be to build new homes, and the higher home prices will climb.
If Trump’s policies are implemented as he has discussed them in the past, we’ll probably see a much more expensive housing market where getting a loan is considerably more challenging and where the risk of an outright market collapse is higher than today. These changes may not happen overnight—economic reforms usually take a while before their impact is felt by everyday people. Even so, some of Trump’s policies are so extreme that their impact could be much more dramatic and fast-acting than people realize.
Q: How do you expect interest rate policies from the Federal Reserve to influence mortgage rates, housing affordability, and demand in the coming year?
If Trump’s policies prove to be inflationary, then the Fed may decide to prematurely end its nascent rate-cutting cycle. Higher inflation may even mean they reverse course completely and begin increasing their target funds rate again. This, along with continued uncertainty in the bond market owing to things like the potential for higher government deficits, will likely push mortgage rates higher over the coming year. I can’t say exactly where they’ll end up, but if President Trump’s policies look like candidate Trump’s, I wouldn’t expect rates to fall below 6% anytime soon. We may even need to make peace with rates staying near or above 7% over the next year.
Q: Do you anticipate major shifts in housing construction or availability due to potential changes in federal regulations, tariffs, or supply chain dynamics?
If Trump’s policies look like those he has discussed on the campaign trail, then I think we probably will see major shifts in housing construction and availability. Mass deportations alone would be enough to disrupt housing construction, and if you add tariffs and a potential global trade war caused by said tariffs into the mix, you’ve got a recipe that results in fewer, higher-priced homes being built.
However, “major” might end up being too strong a word, depending on what Trump does once in office. If all we end up getting are some tariffs on specifically targeted goods, and if mass deportations don’t come to fruition, then housing construction could get more expensive, though not “majorly” so.
Q: Which regions or cities are likely to experience the fastest growth or declines in housing prices, and what factors are driving those trends?
It’s tough to predict what will happen to the housing market nationally over the next year, and even more difficult to say what will happen in individual markets. Part of this is because individual markets can bring with them a ton of quirks that are hard to identify.
Another is that data isn’t always very robust at more local levels. This can lead to contradictory pieces of data. For example, Zillow says home prices in Miami are up about 6% from last year; Redfin says they’re down 7%. Because of that, I just don’t have enough readily available data to provide much concrete insight into what individual regions or cities are likely to do over the next year. If I had to hazard a guess, I’d say that persistently high rates will continue to be an especially noticeable drag on price growth in especially high-cost areas like San Francisco. At the same time, tariffs and mass deportations may make it more difficult for states like Texas (which seems to have done a pretty decent, albeit not perfect, job of constructing homes in recent years) to continue building housing. This could result in prices jumping in some relatively lower-cost areas.
For the most part, I’d argue that things like mass deportations and tariffs will put upward pressure on prices just about everywhere. We’ll just have to wait and see how much of that upward pressure is counteracted by persistently steep mortgage rates and a potentially weakening economy.
Q: What demographic groups—such as first-time buyers, retirees, or investors—are likely to benefit or be challenged by the predicted market conditions?
The combination of potentially higher inflation and interest rates that we may see under Trump will likely make homebuying more challenging for pretty much everyone. Some wealthy buyers, who earn high incomes and have a lot of cash on hand, might be able to take advantage of their hypothetically lower taxes to make buying easier.
In a similar vein, investors may face less pushback when it comes to doing things like buying up single-family homes.
However, (and I know I sound like a broken record here) should they come to pass, mass deportations and tariffs are probably going to offset any benefits of lower taxes and deregulation.
Q: Given concerns about housing affordability, do you foresee federal or state governments implementing policies to address housing shortages or rising costs? If so, how effective do you think these will be?
At the national level, probably not. As mentioned above, Trump’s policies are more likely to exacerbate housing shortages and increase costs than they are to reduce shortages and lower prices. The steps that Trump has talked about that are meant to make housing more affordable—like opening up more federal land to development, cutting taxes, ending unspecified regulations, and somehow arbitrarily lowering mortgage rates—probably aren’t going to be enough to offset his other policies which push housing costs higher. What’s more, some of what he’s suggested (like the notion that he’ll be able to unilaterally lower mortgage rates as president) doesn’t have much basis in reality—at least not with the way laws are currently written.
Some local-level changes, like reworking zoning laws to make it easier for multifamily units to be built, could help lower prices and bring more homes to the market. Unfortunately, these changes often face a lot of political pushback from homeowners concerned about their property values or “the character of their neighborhoods.” On top of that, if the Federal government’s policies are as inflationary as they might be under Trump, then states probably won’t be able to do all that much to reduce home prices even if they wanted to (unless they decide to do things like totally ignore the Federal government and refuse to go along with things like mass deportations).
Q: What steps can policymakers take to improve access to affordable housing while maintaining a stable housing market?
One of the best things for policy[1]makers at the Federal level to do under a Trump presidency would be to refuse to allow mass deportations and blanket tariffs. That’s easier said than done, of course, given that the president has a lot of independent authority over thing like trade and immigration.
Outside of that, lawmakers should focus on building more homes by re-working outdated zoning laws that make construction prohibitively difficult, and by further incentivizing businesses to invest in multifamily housing. This might include offering targeted tax breaks or grants to homebuilders.
Q: Do you expect demand for rental properties to rise or fall in 2025, and how might this affect housing developers’ strategies?
If home prices and mortgage rates stay high next year, or rise even higher than they are now, more people likely will turn to renting. This will drive demand for rental properties higher and may push some housing developers to allocate their resources toward multifamily construction.
However, even if they want to build more rental/multifamily units, mass deportations and tariffs could make doing so very expensive and difficult. Depending on how Trump’s policies are implemented, we could easily find ourselves in a situation where developers are forced to scale back construction projects regardless of how much consumer demand for them there is.
Q: Do you think the GSEs will leave conservatorship under President Trump’s new administration? If so, what are the potential upsides and potential risks?
I think Trump will try to end GSE conservatorship. It’s something he’s talked about in the past and it seems like something Republicans in Congress could get on board for. On the whole, I think that this would be a mistake. It’ll probably make mortgage lending riskier and result in higher mortgage rates and stricter lending standards. Less advantaged groups of people and lower-income borrowers—many of whom are people of color—will probably have a tougher time getting approved for a mortgage.
Ending the conservatorship could open opportunities for more people to invest in Fannie and Freddie, it could also give both organizations more room to experiment with new and innovative business practices as well as to partner and/or merge with other players in the industry. This could make some people very rich, while potentially resulting in some innovations that make it easier for qualified borrowers to get a mortgage.
For the most part, I am skeptical that these benefits will outweigh the negatives. I said it before, and I’ll say it again, the last time we deregulated the mortgage industry, we ended up with a major financial downturn. I’m not saying that ending GSE conservatorship will in and of itself result in an immediate crash, but I think peeling back mortgage industry regulations without any new guardrails being put in place is a recipe for disaster.
Michael Fratantoni, Chief Economist; SVP, Research and Business Development, MBA
Q: What economic policies or changes likely to be proposed or introduced by the Trump administration in 2025 will have the most significant impact on the housing market, and why?
The most important debate that could impact the housing market in 2025 concerns the TCJA (the Tax Cuts and Jobs Act of 2017). Any changes to the tax code have the potential to significantly impact the housing market, and the potential expiration of all the individual provisions of the TCJA at the end of 2025 could have an enormous impact. Beyond that, with the transition following the election, there will be new leadership at the agencies that regulate the mortgage industry, and these changes could also have a noticeable impact on the lending environment.
Q: How do you expect interest rate policies from the Federal Reserve to influence mortgage rates, housing affordability, and demand in the coming year?
We expect that the Federal Reserve will cut short-term interest rates a few more times in 2025, as inflation continues to drop towards the Fed’s target and the job market softens somewhat. However, we don’t expect that mortgage rates will move too far away from where they are today, ending 2025 at 6.4%, not much below what we have seen in recent weeks. We expect that mortgage to Treasury spreads will tighten somewhat from where they are now but will stay wider than the pre-pandemic average as the Fed continues to allow its MBS holdings to run off.
Q: Do you anticipate major shifts in housing construction or availability due to potential changes in federal regulations, tariffs, or supply chain dynamics?
We expect some growth in single-family construction, but a bit of a pullback in multifamily construction, given the oversupply of apartments in some markets. Tariffs will likely add to housing costs, particularly if they are levied on critical inputs such as lumber.
Tighter constraints on immigration will likely add to labor costs for homebuilders, which will be passed on to homebuyers in the form of higher prices.
Q: Which regions or cities are likely to experience the fastest growth or declines in housing prices, and what factors are driving those trends?
Nationally, we are forecasting 1.5% growth in home prices for 2025, as housing inventories grow, and mortgage rates stay relatively flat. Markets that have seen inventories grow most quickly, including some in Florida and Texas, might be most susceptible to some small declines. Other Sunbelt markets that continue to be the beneficiaries of stronger population and job growth are likely to see faster than national home price growth.
Q: What demographic groups—such as first-time buyers, retirees, or investors—are likely to benefit or be challenged by the predicted market conditions?
With mortgage rates steady and a bit lower, and the rate of home price growth slowing, affordability conditions should improve a bit, but it will still be difficult for many potential first-time homebuyers. The increase in inventory should both increase the number of properties these buyers might consider, and decrease the prevalence of bidding wars, but inventory is still expected to be tight at the entry level. Higher property taxes and insurance costs will further reduce affordability. For those boomers looking to downsize, they will have an impressive amount of home equity that they could use on their next home purchase given the rapid runup in home values in the past few years.
Q: Given concerns about housing affordability, do you foresee federal or state governments implementing policies to address housing shortages or rising costs? If so, how effective do you think these will be?
Federal initiatives to open up some federal lands for construction could be helpful. Additionally, regulatory changes at the state and local level which would decrease zoning constraints in other areas would also benefit supply.
Finally, efforts to support the existing stock of homes through the expansion of programs like FHA’s 203(k) could further add to the usable supply. Demand-side measures such as additional down payment assistance programs could help some first-time buyers but would add to demand pressures at the entry level of the market, and the price impact may offset the benefit to some extent. I would also add support for programs like LIHTC which can help in the development of affordable housing.
Q: How are real estate developers and investors preparing for potential economic or regulatory changes under the Trump administration? Are there specific trends they are betting on?
I expect there is greater confidence, given the electoral sweep, that the TCJA provisions will be extended and that tax rates will not increase as a result. Additionally, the expectation of a lighter-touch regulatory environment has boosted business confidence, as evidenced by the upturn in the stock market post-election.
Q: Do you expect demand for rental properties to rise or fall in 2025, and how might this affect housing developers’ strategies?
Rental demand should stay steady in 2025, and this demand will eventually absorb the excess supply of apartments that have been delivered to some markets. Over the medium term, as the Gen Z cohort is smaller than the millennial cohort, there may be some waning of rental demand.
However, if affordability conditions do not improve, many young households could stay in rental units for longer, which would support demand for longer.
Rick Sharga, President & CEO, CJ Patrick Company
Q: What economic policies or changes likely to be proposed or introduced by the Trump administration in 2025 will have the most significant impact on the housing market, and why?
The Trump campaign didn’t spend a lot of time discussing housing-specific policies, but its two biggest economic policy initiatives—mass deportation of undocumented immigrants, and high tariffs on imports—could both impact the housing market. While estimates vary, a large percentage of construction workers are immigrants, with many of those laborers being undocumented. Removing these workers will likely slow down home construction, exacerbating the problem the market already has with insufficient housing supply. If builders can find replacement workers, they’ll probably be more expensive, which could result in home prices rising as well. Similarly, high tariffs are likely to increase the cost of imported materials and products for builders, costs which will almost certainly be passed along to homebuyers.
On the other hand, the Trump campaign also pledged to eliminate “unnecessary” regulations, which could speed up construction and reduce costs.
The President-elect has also mentioned opening up government-owned land and making it available for affordable housing construction. While much of the land owned by the federal government isn’t suitable for housing, some of it is, and making it available would help solve the limited land availability that has been a headwind for builders over the past decade.
Finally, the Trump administration could consider expanding the Qualified Opportunity Zone (QOZ) program that was implemented during its first term. This program was reasonably successful in bringing much-needed capital into underserved and underdeveloped areas, delivering a win/win scenario for these communities and the investors who provided the development funds in exchange for relief on their capital gains taxes.
It’s worth noting that the Trump administration is unlikely to pursue some of the policies espoused by the Biden administration and the Harris campaign calling for rent control, a cap on investment properties, and a dramatic increase in the capital gains tax rate.
Eliminating or not implementing these policies should result in a more robust environment for real estate investors.
Q: How do you expect interest rate policies from the Federal Reserve to influence mortgage rates, housing affordability, and demand in the coming year?
The Federal Reserve is in an interesting position as we enter 2025: they’ve managed to slow down what had been an overheated economy, and probably need to continue cutting the Fed Funds rate to avoid a possible recession; but recent reports also show that inflation may be creeping back up, suggesting that rate cuts might run the risk of re-starting higher rates of inflation. Further complicating the matter are the proposals from the Trump administration for higher tariffs and mass deportations—both of which many economists view as inflationary and likely to increase an already-too-high federal deficit of over $36 trillion.
The Fed Funds rate isn’t directly tied to mortgage rates, but it does influence interest rates in general and set the overall tone for credit and lending, so if the Fed decides to reverse course and raise the Fed Funds rate, as some economists are speculating, it wouldn’t be a surprise to see mortgage rates follow suit. But it’s more likely that mortgage rates will closely track yields on the 10-year U.S. Treasury, as they have historically.
Those bond yields may increase unless there’s some progress toward deficit reduction; this could also result in mortgage rates going up, or at least not going down very much.
Q: Do you anticipate major shifts in housing construction or availability due to potential changes in federal regulations, tariffs, or supply chain dynamics?
Based strictly on supply and demand, we should see builders continue to increase construction of single-family homes in 2025. But there are a lot of moving parts that could disrupt the new home market. Fewer regulatory hurdles and increased availability of government lands for housing development could both increase production, but mass deportation of undocumented immigrants could exacerbate labor shortages and increase labor costs for builders, and higher tariffs could also increase costs or disrupt supply chains. There’s almost always a significant difference between the hyperbole of a presidential campaign and the actual policies implemented after the election; if that’s true this time, the new home market will probably continue to see incremental growth in housing starts and completions to meet demand.
Q: Which regions or cities are likely to experience the fastest growth or declines in housing prices, and what factors are driving those trends?
A lot of this comes down to supply and demand. There are a few states where the inventory of homes for sale has exceeded pre-pandemic levels, such as Florida and Texas, and in those states, we’re seeing home prices decline in some markets. There’s also been a reversal in prices in some of the markets that saw prices accelerate to unsustainable levels during the pandemic, like Boise and Austin. But the Northeastern states and swaths of the Midwest, where inventory levels are still very low, are continuing to see prices rise. We’re also continuing to see a trend of population migrating from high-cost, high-tax states like California and New York to less expensive markets in the South and Midwest, which suggests that prices might continue to rise in those regions.
Probably worth noting that it’s unlikely we’ll see home prices appreciate very much in most markets next year; most forecasts expect prices to go up between 3.5-4% in 2025.
Q: What demographic groups—such as first-time buyers, retirees, or investors—are likely to benefit or be challenged by the predicted market conditions?
First-time buyers will continue to be the most challenged in 2025. Affordability is the worst it’s been in 40 years, and unlikely to improve dramatically next year, and while the inventory of homes for sale has improved, there’s virtually nothing available at the entry level of the market. Retirees are increasingly choosing to age in place and tapping into their home equity to pay for home improvements that accommodate their changing physical needs. There should be ample opportunities for investors, especially rental property investors, as many prospective homebuyers will opt to rent until market conditions improve. And the Trump administration will probably create a somewhat more investor-friendly environment for real estate investors.
Q: Given concerns about housing affordability, do you foresee federal or state governments implementing policies to address housing shortages or rising costs? If so, how effective do you think these will be?
There’s a limit to what the federal government can do to stimulate home construction, but making government lands available for development, expanding the QOZ program, and providing tax incentives for builders to create more affordable housing units are all things that the Trump administration has discussed. The Trump administration has also talked about leveraging tax and funding policies to entice state and local governments to remove some of the restrictions and regulatory hurdles currently preventing or dramatically limiting homebuilding. We may see more state and local legislation aimed at allowing more ADUs, although that doesn’t seem likely to make much of a dent in the overall housing shortage.
The private sector might step up production of manufactured housing and 3D-printed homes as a way to reduce construction costs and shorten the time it takes to build houses.
Q: What steps can policymakers take to improve access to affordable housing while maintaining a stable housing market?
Anything that policymakers can do to increase supply will improve access to affordable housing. Creating incentives for homebuilders to develop entry-level homes would help immensely. Removing regulatory burdens could help reduce costs; eliminating zoning restrictions could free up development opportunities.
More broadly, ensuring a strong economy with the creation of good jobs and solid wage growth creates the foundation needed for a strong housing market. Reducing the federal deficit could send bond yields a bit lower, which in turn would help reduce mortgage rates.
So, more inventory helps offset the supply and demand imbalance, slowing home price appreciation; lower bond yields help reduce borrowing costs; and improved wages increase buying power. The combination of those three elements ultimately is what it will take to bring affordability back to reasonable levels.
Q: Do you expect demand for rental properties to rise or fall in 2025, and how might this affect housing developers’ strategies?
We have the largest number of young adults between the ages of 25-34 in the history of the country. Those are prime years for household formation and first-time homebuying. The largest wave of millennials in that age range hasn’t hit the market yet but will do so over the next two years. Millions of those prospective homebuyers are on the sidelines today, opting to rent because they can’t afford to buy a house, which should create a lot of demand for both multifamily and single-family rental properties.
However, about one million apartment units will have entered the market during 2023-2024, and vacancy rates have edged up just above historic averages in many markets, causing rental rates to flatten and in some cases decline slightly on a year-over-year basis. Multifamily housing starts have plummeted this year and aren’t likely to rebound dramatically until 2026.
Q: Do you think the GSEs will leave conservatorship under President Trump’s new administration? If so, what are the potential upsides and potential risks?
I think the Administration would probably like to end the GSE conservatorship and allow private capital to play a larger role in the secondary market.
But Fannie Mae and Freddie Mac have an enormous footprint in the market today, so removing the conservatorship could disrupt the entire mortgage industry and would be likely to cause mortgage rates to rise, at least temporarily. Ending the conservatorship would also mean that the government will no longer benefit from the enormous profits that the GSEs have been generating, which seems unlikely while the federal deficit continues to increase.
From a practical standpoint, it doesn’t seem likely that the conservatorship could be unwound carefully and without damaging the mortgage industry in the two years the Administration has before the mid-term elections. Historically, the incumbent party almost always loses either the House or the Senate during the mid-terms, and it seems unlikely that a divided Congress would pass legislation to end the conservatorship.
Lisa Sturtevant, Chief Economist, Bright MLS
We should expect more volatility in the housing market in the near term, as Donald Trump becomes only the second president to win non-consecutive terms. Over the longer term, homeownership could become harder to attain for first-time and moderate-income homebuyers, as his policies favor high-income individuals and existing homeowners.
Trump’s fiscal policies can be expected to lead to rising and more unpredictable mortgage rates through the end of this year and into 2025. Signals of higher mortgage rates are already out there in the form of rising yields on the 10-year Treasury. Bond yields are rising because investors expect Trump’s proposed fiscal policies to widen the federal deficit and reverse progress on inflation.
An independent analysis shows that Trump’s proposed fiscal policies will widen the federal deficit by an estimated $7.5 trillion over the next decade. To pay interest on the mounting federal debt, the government has to issue more Treasury bonds. Investors have already driven yields on Treasury bonds up, demanding a higher return with the expectation of higher deficits. Mortgage rates will closely follow yields on the 10-year Treasury bonds and will also likely increase in the weeks ahead.
Furthermore, despite Trump’s rhetoric during the campaign that he was the candidate who would bring prices down, the combination of his proposals around tax cuts, tariffs, and immigration will lead to higher inflation.
A reversal in inflation, which has been falling for most of the past two years, would complicate the Federal Reserve’s rate-cutting decisions. If the Fed holds back on rate cuts, mortgage rates could remain higher for longer.
There is also a greater risk of uncertainty about monetary policy under a Trump presidency. During the campaign, he repeatedly claimed that he would force the Fed to cut interest rates.
The Fed does not control long-term borrowing costs directly but has an impact on those rates through a combination of short-term rate setting and bond purchases. The market has come to expect a central bank that makes decisions in[1]dependent of Presidential interference.
Pressure from the executive branch on Fed decision-making would introduce unpredictability, likely leading to more turbulence in the mortgage market.
Other policies proposed by Trump will make homeownership harder to attain, particularly for first-time, first-generation, and more moderate-income homebuyers. His mass deportation proposal would have a chilling effect on the construction industry, shrinking the already constrained labor force and stalling badly needed new housing construction. At the same time, proposed tariffs will increase building costs. Limited inventory will keep home prices high and will continue to sideline many first-time buyers.
The housing market was just beginning to feel as though it was moving more toward balance following the unprecedented impacts of a global pandemic and related responses. Heading into the election, inflation was coming down, mortgage rates had been easing, and more inventory was coming onto the market. The next few months could be a challenging time for prospective homebuyers.
