President-Elect Trump pledges significant policy shifts upon his return to the White House. What could they mean for the housing market?
Key takeaways:
- Buyers will likely see mortgage rates around 7%, rising house prices, and more home sales.
- Sellers may see a slight uptick in buyer demand and home sales, but it could be another slow year.
- Renters might catch a break. Higher house prices will push more people into renting, while flat rent growth and rising wages will make rentals more affordable. Low-income families and those using government assistance will likely have a harder time, though.
Donald Trump will return to the White House on January 20th, supported by a Republican-controlled Congress with plans to advance his agenda.
One of the most pressing issues he faces is the housing affordability crisis, which was a central issue in the run-up to the election and helped flip some voters in particularly unaffordable areas. Many people have been understandably frustrated with skyrocketing costs and limited supply over the past four years.
So, to help you navigate the next four years and beyond, let’s take a look at how a second Trump presidency could impact buyers, sellers, and renters.
>> Read more: Redfin’s 2025 Housing Market Predictions
What a Trump presidency may mean for homebuyers
The president-elect promises significant changes to the economy and housing market. Here’s what homebuyers could see in the next four years:
1. Mortgage rates will likely stay put
Buyers should expect mortgage interest rates to remain elevated and volatile for the foreseeable future. Following the election, mortgage rates surged to around 7% in anticipation of Trump’s policies – where they will likely remain through 2025. However, everything hinges on what Trump decides to do.
Trump has plans to impose tariffs, reduce taxes, and eliminate inflation, all of which influence mortgage rates. Mortgage rates and inflation are particularly intertwined.
Experts fear that tariffs may reignite inflation and slow global economic growth. Inflation has steadily dropped from its 2022 peak, but could reverse course if Trump follows through on his agenda. Tax cuts would also increase the national debt unless they were offset by spending cuts. Investors have already baked expected changes into today’s mortgage rates, but if inflation rises more than expected, mortgage rates would probably follow suit.
Trump has also promised to lower interest rates, which affects mortgage rates. However, since mortgage rates are set by the bond market via investors, it’s largely out of his control.
Investors believe that if Trump implements his policies, and the economy stays strong, the Fed will only cut interest rates once in 2025. However, if the economy weakens or the plans for tariffs and tax cuts are dialed back, the Fed could cut more and mortgage rates could fall. In general, the housing market will be unpredictable.
>> Learn more about mortgage rates from our economists
2. Home prices may rise
Redfin expects house prices to continue rising through 2025, as there may not be enough inventory to meet demand. Prices have hovered near record highs for months, leading to record-low affordability and few sales. However, prices may fall in places most affected by climate change.
Trump has pledged to lower housing costs by building more homes. He wants to encourage homebuilding by reducing regulations, extending his 2017 tax cuts (TCJA), and opening federal land for development.
Reducing regulations will likely help improve supply, but Redfin believes these proposals won’t fully address the current affordability crisis for three reasons:
- Local regulations – not federal ones – control much of the building process;
- The TCJA reduces tax benefits for homeownership, hurts the economy, and benefits the highest earners;
- Opening federal land for development will only make a small dent in bringing down prices, partly because most federal land is in the West.
3. Demand could come back
Homebuyer demand has been low for most of the year, but it notably increased before the election on the heels of two Fed rate cuts. And defying expectations, it rose again following the election and into 2025, even with elevated mortgage rates, sky-high house prices, and a murkier outlook.
Pending U.S. home sales are also creeping back up, and Redfin’s Homebuyer Demand Index recently hit its highest level since 2023. Demand seems likely to hold strong this year, so now may be a good time to enter the market and get ahead of competition.
4. Housing supply may slightly improve
Supply may improve if Trump lifts building regulations, which currently add an estimated $94,000 to the cost of a new house. The National Association of Home Builders (NAHB) has expressed increased confidence that under a Republican congress, development may be easier. We would need to see actual regulation change for this to prove true.
New construction has slowed down recently, but fewer regulations could bring some relief to the industry. Estimates suggest there is now a shortage of between 2 to 5 million homes for sale, which is driving up prices.
Aside from deregulating the industry, though, Redfin Senior Economist Chen Zhao believes Trump’s immigration policies, specifically his calls to restrict border crossings and perhaps start mass deportation, could reduce the construction workforce, making it more expensive to build homes. About a third of construction workers in the U.S. are immigrants, and nearly 14% are undocumented. His plan to build homes on federal land could help but has been met with mixed reviews.
What a Trump presidency may mean for home sellers
Home sellers may see a slight uptick in home sales, although a lot is up in the air. Here’s what sellers might be in for under a Trump administration:
1. Homes sales may increase but could remain in a historic slump
Home sellers could see more home sales, but we don’t predict any major improvements as the market grapples with Trump’s policies and an affordability crisis. An exception may be among lower-priced homes, as older buyers priced out of higher price tiers snap up homes they can afford.
2024 was a historically slow year for home sales, leaving the industry feeling “frozen.” Now, because of Trump’s reelection, Redfin expects home sales to improve, albeit marginally. Sales posted an increase in October and held strong in November. If the economy stays strong and mortgage rates decline more than expected, sales will likely improve further in 2025.
Trump plans to improve affordability and boost housing stock by reducing regulations and building on federal land. However, his promises for tariffs and deportations would be quite disruptive to the economy and may undo gains made elsewhere.
2. Sellers could see more demand
Buyer demand could reverse course and improve. Homebuyer activity jumped immediately after the election. Plus, the Fed cut interest rates three months in a row to close out 2024, although just one cut is expected this year. Since mortgage rates aren’t expected to fall significantly anytime soon, many buyers don’t feel like they have much reason to wait. Time will tell if recent spikes in demand are signs of a longer trend.
However, some experts believe housing affordability could decline under a Trump presidency. Depending on how the proposed tariffs, deportations, and tax cuts pan out, they could negatively impact the housing market and harm demand.
3. House prices will likely continue rising
A severe inventory shortage and pent-up buyer demand will probably allow house prices to continue their steady rise into the new year. Redfin expects prices to rise by 4% in 2025.
Trump’s proposed solutions to build more homes and bring down prices are unlikely to improve the situation. In fact, construction may slow and inflation could rise if he deports migrants and imposes tariffs. The prospect of fewer regulations has brought optimism to homebuilders, though.
Even if mortgage rates do end up falling, more buyers would likely then enter the market, which will boost prices. It will take a few years for the increase in homebuilding to make housing significantly more affordable.
What a Trump presidency may mean for renters
Donald Trump has offered few details on how he will assist renters. There are a couple of hypotheses we can make, though:
1. Rental affordability may improve
Renters can expect rents to hold steady through 2025, as new units continue hitting the market. Flat rents plus rising wages equals more affordable rentals.
Even though multifamily construction has dropped, affordability could further improve under a new administration. Trump’s plan to deregulate the industry and remove permit requirements may bolster supply. Supply and demand are the primary drivers behind rent prices.
This could help bring down the share of cost-burdened renters, too. Today, more than half of all renters are rent-burdened, and most low-income renters can’t afford a one-bedroom unit.
However, beyond reducing regulations, Trump’s promises to impose tariffs and deport migrants will likely negatively impact the rental market. Tariffs could hike building costs and slow new construction (supply), which would be passed onto the consumer in the form of higher rents. Deporting migrants will harm the construction industry.
2. Government assistance could be cut
Low-income renters will likely be hit hard, especially those relying on government housing assistance. Trump has previously called to defund housing assistance, which would have raised rents for the most vulnerable populations.
Groups that advocate for low-income housing fear that the new administration will again try to cut funding to affordable housing programs. The Department of Housing and Urban Development (HUD) in particular is expected to have its budget slashed. This would push the burden to cities and states, who would almost certainly be unable to maintain current funding. Some groups are excited about moving housing programs to individual states and reducing federal spending. Others are concerned about how programs will be affected.
Nonetheless, several local pro-affordable housing ballot measures have passed recently, which shows that there is support to maintain programs at the community level.
Those relying on Supplemental Security Income (SSI), making minimum wage, and/or living in poverty generally can’t afford housing and turn to government assistance programs – many of which are provided by HUD. Without funding, these programs would be unable to serve an already overwhelming number of people. Housing Choice Vouchers (Section 8), Community Development Block Grants, and Public Housing are most likely to be affected.
Final thoughts
Donald Trump’s second term promises many changes to the housing market. His proposals to ease regulations and open federal land for new development could help improve supply and affordability. On the other hand, imposing tariffs and deporting migrants would have consequences for inflation, affordability, and housing supply.
A lot might change over the next four years. If you’re in the market for a home or rental, or looking to sell, it’s especially important to stay informed, talk with your agent or landlord, and not lose sight of finding your home.
