Trump will inherit a housing market that is creaking under the pressure of high prices and high interest rates
President-elect Donald Trump is inheriting a real estate market that looks nothing like it did in his first term.
Affordability, as measured by average home prices and mortgage rates, has deteriorated significantly and is affecting consumer attitudes toward the economy as a whole.
Buying and selling activity has slowed dramatically as homeowners stay put to avoid giving up the subprime mortgages they got before 2022. Sales of existing homes in 2024 are on track to hit their lowest level in nearly 30 years.
The average 30-year fixed mortgage rate is about 7%, compared to 4.09% at the start of his first term. A family putting 20% down on a $400,000 home would pay $594 more each month now compared to early 2017.
Even finding a home at that price is an increasing challenge. The average home in the US sells for $420,400, up 35% from just before Trump’s first term. Back then, the average house cost $310,900.
Read more: The real estate market in 2025: Is it a good time to buy a house?
The new Trump administration has promised to lower mortgage rates and house prices by initiating mass deportations of undocumented immigrants and easing federal regulations around construction and land use.
But economists and real estate experts say sweeping changes are unlikely to be that simple, and some of Trump’s proposed policies, such as tariffs, risk worsening inflation and housing affordability.
“I don’t see how President Trump is going to lower rates, especially not with higher tariffs, deporting immigrants and deficit-financed tax cuts,” said Mark Zandi, chief economist at Moody’s Analytics. “It’s all very inflationary.”
Supply chain disruptions related to the pandemic have made many components of home construction more expensive, contributing to the rapid rise in home prices in recent years.
Trump’s promise to impose broad tariffs of 25% on imports from Canada and Mexico and an additional 10% on Chinese imports has many economists worried the problem will worsen.
The National Association of Home Builders, a trade group, estimates that 7% — or $13 billion — of materials used in residential construction will be imported in 2023. The industry relies on Canada for most of its lumber, Mexico for lime and gypsum used in plaster, and China for appliances.
Trump said mass deportations would reduce demand for housing, freeing up more space for citizens.
While undocumented immigrants need their own places to live, economists say deportations ultimately risk even more damage to housing because so many immigrants work in construction. Nearly a third of the construction workforce is foreign-born, according to the NAHB. In California, where the housing crisis is particularly acute, immigrants make up 41% of the workforce.
