Published by REALTOR.com | December 4, 2024
Trump, who first gained fame as a real estate developer, will take office in January.
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.
