As Donald Trump prepares to take office, he faces a U.S. housing market grappling with significant challenges. High home prices and rising mortgage interest rates have created an environment of uncertainty, with affordability at its lowest levels in decades.
The housing market has been under immense strain in recent years. Home prices have surged across much of the country, driven by limited supply and strong demand. The pandemic-era boom in real estate saw prices soar, leaving many prospective buyers unable to enter the market. Compounding the issue, the Federal Reserve’s aggressive interest rate hikes to combat inflation have pushed mortgage rates to multi-decade highs, further dampening affordability.
The National Association of Realtors recently reported that the median price of an existing home in the U.S. remains near record levels. However, sales have slowed significantly, with many homeowners choosing to stay put rather than trade up in a market with high borrowing costs. First-time buyers are finding it particularly difficult to compete, with many opting to rent instead.
The strain is not just felt by individual buyers and sellers but also by the construction industry. Builders are cautious about ramping up new projects as high rates and economic uncertainty weigh on buyer sentiment. The pace of new construction remains well below historical averages, exacerbating the supply crunch.
Trump’s administration will inherit these challenges, with housing experts urging policy measures to address affordability and supply. Proposals include easing zoning restrictions, increasing funding for affordable housing initiatives, and revisiting mortgage lending practices to ensure access for qualified buyers.
With housing being a cornerstone of the economy, its health will be crucial for broader economic growth. As Trump takes the reins, addressing the pressures on the housing market will be a critical component of his economic agenda. Whether through tax reforms, incentives for builders, or measures to stabilise interest rates, the incoming administration’s actions will be closely watched by both industry players and the millions of Americans affected by the state of the market.
