Donald Trump’s Second Term Could Bring ‘Significant Shifts’ to the Housing Market

President-elect Donald Trump‘s second term in the White House could bring “significant shifts” to the housing market, according to the new 2025 housing forecast from the Realtor.com® economic research team.

Trump, who first gained fame as a real estate developer, will take office in January. During his previous term, the Republican pushed for tax cuts, deregulation, and business-friendly policies to spur economic growth.

If these initiatives return in his second term, they could have a big impact on everything from mortgage rates to new home construction, according to the new forecast.

“While President-elect Trump can work quickly with his administration to implement some regulatory changes, other policies that will affect housing, such as tax changes and broad deregulation, require the cooperation of other branches and levels of government,” says Realtor.com Chief Economist Danielle Hale.

“The size and direction of a Trump bump will depend on what campaign proposals ultimately become policy and when. For now, we expect a gradual improvement in housing market dynamics powered by broader economic factors. The new administration’s policies have the potential to enhance or hamper the housing recovery, and the details will matter,” she adds.

Mortgage rates expected to remain elevated

The forecast projects that mortgage rates will remain little changed in 2025 despite Trump’s promise on the campaign trail to cut home loan interest rates to 3% or lower.

The report forecasts that mortgage rates will average 6.3% across 2025, and end the year at 6.2%. That’s a leg down from the 6.7% average expected across 2024 by year-end, but still well above the 4% historical average recorded from 2013 to 2019.

Presidents have little direct control over mortgage rates, which follow trends in the bond market. However, over time, economic trends can influence rates—with a strong job market, high inflation, or increased government deficits among the factors that tend to push interest rates higher.

Although Trump has tapped billionaire Elon Musk to find ways to slash government spending, interest rates jumped immediately after Trump’s election win as markets anticipated either stronger economic growth, higher inflation, larger deficits, or some combination.

The forecast projects that home prices will grow an additional 3.7% through next year, after rising 4% this year and 1.1% in 2023. Sales of previously owned homes are projected to tick up to 4.07 million, a 1.5% gain from this year, but still sluggish compared with the 2013–19 historical average of 5.28 million.

As measured by the typical share of income spent on home payments, affordability remains near record lows, and the forecast projects little improvement next year.

However, if Trump manages to deliver strong economic growth that boosts incomes, it could make homes relatively more affordable. As well, tax cuts that deliver more disposable income, which Trump has promised, could boost the home purchasing power of households.

“If both income growth and lower tax rates come to fruition, we could see homes become somewhat more affordable in 2025 than in the past few years. The wild card, of course, is how other policies of a new Trump administration affect the price of other goods and services,” the new report notes.

The policy agenda wild card

On the campaign trail, Trump’s proposals on housing were sweeping, though frequently light on details: cheaper homes, lower interest rates, and more new-home construction.

Exactly when and how the Trump administration pursues those objectives is a major question mark hanging over the housing market for 2025.

The new forecast notes that one of Trump’s proposals to address the housing shortage is to cut regulations for homebuilders, which estimates suggest contributes to more than $90,000 of the cost of a new home.

Trump has also called for opening up some federal land for home construction, though that proposal might mainly affect the West, where most federal lands are located.

On the other hand, some of Trump’s proposals, including increased tariffs and mass deportations, could boost the price of everyday goods and services for consumers, reigniting inflation, the forecast notes.

As well, new tariffs and an immigration crackdown could hit the construction industry, raising prices for new homes, the forecast warns.