Trump’s new housing strategy is all about boosting buyers now

Trump’s new housing proposals, unveiled this past week on his social-media account, are concentrated on helping home buyers and lowering mortgage rates.

Trump kicked off his new housing agenda on Wednesday. He announced he would take steps to ban Wall Street firms from buying homes, to ease competition for first-time buyers.

A day later, the president said he would direct the government-backed mortgage-finance companies Fannie Mae and Freddie Mac to buy $200 billion in mortgage bonds, a move economists think could lead to lower mortgage rates. The average rate for a 30-year fixed mortgage fell Friday to the lowest level since 2023, according to Mortgage News Daily, a tracker of home-lending rates.

Trump’s focus is on increasing home-buyer purchasing power. Industry analysts and economists say the administration will also have to find ways to meaningfully increase the supply of homes, at a time when the U.S. faces a shortage of millions of units nationwide.

The administration’s latest proposals also don’t directly address affordability for renters.

The administration said many more proposals are on the way and would be unveiled at an economic summit in Davos, Switzerland, later this month.

Bill Pulte, the administration’s head of housing finance, said this past week he has mulled over 30 to 50 other ideas for the housing market.

On Friday, with reporters, he raised the possibility of the “portable mortgage"—an idea that would allow homeowners who want to move to take their existing mortgage rate with them.

“We’re focused on getting physical human beings in homes the way that nature intended," Pulte said in an interview with The Wall Street Journal.

Other Republicans are weighing in. Sen. Josh Hawley of Missouri suggested on social media that the U.S. should allow people to raise money for a down payment on a home by dipping into their retirement accounts, without penalty fees.

For now, Trump’s housing proposals have raised questions about how the policies would be implemented, and at least one of them would need congressional approval.

Even if Trump succeeds in bringing down mortgage rates and breathing new life into the moribund housing market, he might not get his desired outcome. If government policies overstimulate demand from buyers without increasing the supply of houses, they may push prices higher as more buyers compete for a limited number of homes.

“If you’re going to do all these demand-side things and you don’t have any supply-side things, you’re going to make the problem even worse," said Ed Pinto, co-director of the AEI Housing Center at the American Enterprise Institute.

A Trump spokesman said: “President Trump is committed to making it easier and more affordable to achieve the American Dream of homeownership by eliminating unnecessary red tape, increasing supply, and lowering costs."

Housing costs have risen to the top of the list of American financial anxieties, and the issue played a role in Democratic election victories last fall. Home prices are up more than 50% since 2019, while rents have risen at historic rates and remain high. Mortgage rates are more than double where they were in 2021.

Nearly eight in 10 Americans say finding affordable housing in their community is either very difficult or somewhat difficult, according to a YouGov poll last month.

Some Trump advisers and housing-industry lobbyists are pushing policies to help builders. Their ideas include expanding tax credits to developers and easing building regulations, industry leaders say.

Pulte and Commerce Secretary Howard Lutnick have visited a number of times with home builders. The meetings were initially adversarial. More recently, Lutnick asked builders what kind of incentives they would like, according to a person familiar with the discussions.

“Secretary Lutnick is focused on driving housing costs down," a representative for the Commerce Department said.

The president, however, sees an upside in limited supply. He remarked at a late-December press conference that fast-growing home values have enriched many American homeowners.

“You create a lot of housing all of a sudden, and it drives the housing prices down," he said. “So I want to take care of the people who have houses, who have a value to their house that they never thought possible…At the same time I want to make it possible for people to go buy houses."

Real-estate industry professionals have welcomed some of Trump’s recent proposals, while saying they fall short in addressing larger housing-affordability problems.

A ban on large investors buying single-family homes could help first-time buyers shopping for lower-priced homes, or those who rely on down-payment assistance, said Trevor Halpern, a real-estate agent in the Phoenix area.

“We do see consumers in that price range losing out against the bigger-wallet type of buyers," he said.

Large investors with portfolios of more than 1,000 homes own only a small fraction of total housing in the U.S., but they were active buyers in recent years, especially in fast-growing areas like Phoenix and Atlanta, where they focused on suburban homes around or below average prices.

Home buyers face other headwinds. Many buyers are grappling with higher costs for home insurance, property taxes and homeowner-association dues. Concerns about job security are also rising, making more people hesitant to buy, real-estate agents said.

“Everybody’s hyper-focused on rates, and that’s just, in my opinion, half or even less than half of the story," said Eric Bramlett, owner of brokerage Bramlett Partners in Austin, Texas.

Economists also voiced concern that boosting home purchasing without a plan to increase supply would widen the wealth gap between homeowners and those who can’t afford to buy.

“Whenever we subsidize mortgages, guess what? It all gets capitalized into home prices," said Stijn Van Nieuwerburgh, real estate and finance professor at Columbia University’s graduate school of business. “All these demand subsidies don’t really work in a world where you don’t supply new housing."

Write to Will Parker at will.parker@wsj.com, Rebecca Picciotto at Rebecca.Picciotto@wsj.com and Nicole Friedman at nicole.friedman@wsj.com