Impact of President Trump’s inauguration on the US housing market

President-elect Donald Trump wants to address housing affordability in the United States by encouraging the construction of new homes.

“We’re going to open up railroad tracks on federal land for housing construction,” President Trump said at a press conference on August 15. “We desperately need housing for people who can’t afford what’s going on.”

According to the National Association of Realtors, there will be a shortage of 4 million homes in the U.S. by mid-2023.

“It’s clear that the recipe for that crisis is building further,” said Jim Tobin, president and CEO of the National Association of Home Builders.

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Although there has been a slight increase in the number of new homes being built this year, it is still not enough to meet the high demand for housing, experts say, leaving a gap in the market with not enough homes available for buyers. House points out.

U.S. single-family housing starts, a measure of new housing construction, rose to 1.027 million in September, according to U.S. Census data. It has increased by 2.7% since August.

While building more housing is an easier solution to addressing the nation’s housing problem, other promises made by President Trump could also hinder affordability efforts, experts say. points out.

For example, while President Trump has talked about enacting mass deportations of immigrants in the U.S., Jacob Channell, senior economist at LendingTree, says that the construction industry relies on immigrant labor, so He said this could lead to an increase in construction costs.

Experts said the president also insisted he would lower mortgage rates to pandemic-era lows, although he has no control over them.

Here’s how some of President Trump’s policies could affect the housing market during his administration, according to experts.

At the end of his first presidential term, President Trump signed an executive order creating the “Removal of Regulatory Barriers to Affordable Housing: Federal, State, Local, and Tribal Opportunities.”

“This could be a blueprint for the future,” said Dennis Shea, executive director of the Terwilliger Center, a bipartisan policy center.

During his 2024 campaign, Trump called for cutting regulations and permitting requirements that could increase housing costs for homebuyers. Experts say regulatory costs are having a trickle-down effect on the prices faced by home buyers.

President Trump said in a speech at the New York Economic Club on September 5, “I will eliminate regulations that drive up housing costs, with the goal of cutting the price of new housing in half.”

About 24% of the cost of a single-family home and 41% of the cost of a multifamily home is directly attributable to regulatory costs at the local, state, and federal level, Tobin said.

“Reducing the regulatory burden on building homes and building apartments will lower costs for consumers,” Tobin said.

President Trump has also blamed rising home prices on a surge in illegal immigration under the Biden administration. But experts say most illegal immigrants are not homeowners.

Instead, they live in homes owned by U.S. citizens, Channell said. If a mass deportation were to occur, such homes would remain occupied, he added.

But proposals like mass deportations and tighter border controls could impact housing affordability, Tobin said.

According to NAHB, about one-third, or 31%, of U.S. construction workers were immigrants.

“Anything that threatens to disrupt the flow of immigrant labor is going to send a shockwave through the housing construction labor market,” Tobin said.

Recruiting locally-born workers into the construction industry is difficult, experts say.

According to a 2017 NAHB study, construction is an unpopular career choice for young Americans. According to the poll, only 3% expressed interest in this field.

Therefore, wiping out a large number of available workers can result in labor shortages at construction sites. And with fewer workers, wages could rise, which “will likely be passed on to consumers” through higher home prices, Channell said.

Additionally, efforts to increase supply will be delayed as construction companies take longer to complete housing projects, he added.

Tobin said the industry is still heavily reliant on immigrant labor, although it is “doing a better job” of training the domestic workforce through trade schools, apprenticeships and other initiatives.

President Trump has proposed imposing a flat tariff of 10% to 20% on all imported goods, and 60% to 100% on products from China.

Experts say a blanket tariff of 10% to 20% on building materials such as wood could raise not only home prices but also materials for home improvement.

“Tariffs that raise the cost of products have a direct impact on consumers,” Tobin said.

The average cost to build a single-family home is about $392,241, according to data analysis by housing and real estate data newsletter ResiClub.

“It depends on what happens with tariffs,” said Darryl Fairweather, Redfin’s chief economist. “There could be a variety of impacts.”

Overall, home builders expect to build about 1.2 million new single-family homes and about 300,000 multi-family homes over the next year, Tobin said.

“We haven’t recovered to the pace we need yet, but we’ll get faster,” he said. “It will be higher than this year.”

It may be too early to tell whether the Trump administration will prioritize housing costs as much as the Harris administration. Fairweather also said the aid Trump mentioned may not help densely populated areas.

President Trump has mentioned plans to free up federal land for housing, but said federal land tends to be concentrated in rural areas.

“It doesn’t help the densely populated blue cities that really need the help the most,” Fairweather said.