In a Cabinet meeting last week, President Donald Trump emphasized that while he wants to make homebuying more accessible to Americans, he doesn’t want it to come at the cost of existing homeowners who have seen their equity skyrocket.
“Existing housing, people that own their homes, we’re going to keep them wealthy,” Trump said. “We’re going to keep those prices up. We’re not going to destroy the value of their homes so that somebody who didn’t work very hard can buy a home.”
His remarks come after a monthslong affordability push, in which his administration has floated a grab bag of ideas, including portable mortgages, 50-year terms, banning institutional investors, and even loosening rules around tapping retirement funds for down payments—an idea Trump has publicly signaled skepticism about.
It’s also landing as the latest Flow of Funds data from the Federal Reserve shows household real estate values slipping from record highs in the third quarter of 2025. The total value of household real estate shed $361 billion, and owners’ equity as a share ticked down to 71.6%, a slight decline from the 72% of the second quarter of 2025.
“I don’t want to drive housing prices down. I want to drive housing prices up for people that own their homes,” Trump said. “And they can be assured that’s what’s going to happen.”
The needle the president is trying to thread is a difficult one: Make homes easier to buy without bringing prices down or turning a rate drop into another price surge that prices even more buyers out. It’s not impossible, but it would require a rare combination of market conditions.
The White House bets on lower rates as the affordability lever in 2026
In his most recent push, the president is framing affordability less as a question of sticker price and more as a question of what buyers can carry each month.
That means betting on borrowing costs, not home values. And even under the administration’s own baseline, prices aren’t expected to give buyers much breathing room in 2026.
Realtor.com® forecasts home prices rising 2.2% this year, while mortgage rates are projected to average about 6.3%. It’s a lose-lose for current homeowners who got used to seeing more sizable price gains every year and for hopeful buyers who still can’t afford to break into the market.
The relief scenario the White House is effectively selling, then, is one where prices accelerate up but monthly payments stop getting worse, or at least ease at the margin.
“We’re going to get interest rates down. But I want to protect the people who, for the first time in their lives, feel good about themselves,” Trump said. “They feel like, you know, that they’re wealthy people.”
To try to force that outcome, Trump has directed Fannie Mae and Freddie Mac to purchase $200 billion of mortgage-backed securities.
“This will drive Mortgage Rates DOWN, monthly payments DOWN, and make the cost of owning a home more affordable,” Trump promised on his Truth Social platform.
But it’s unclear how much of a dent a $200 billion purchase can make in the estimated $12 trillion market for U.S. mortgage bonds. As of the end of January, mortgage rates have held relatively steady in the low 6% range—still high enough to keep many buyers priced out and sellers locked in to their ultralow rates.
At the same time, Trump has intensified his pressure campaign around Federal Reserve leadership, targeting Chair Jerome Powell, whom he views as keeping rates unnecessarily high. Last week, he announced Kevin Warsh as his pick to succeed Powell when Powell’s term ends in May 2026.
Despite his reputation as a hawk, Warsh has advocated for lowering short-term rates because he believes there’s more runway than the current Fed can see.
But can it work?
On paper, the “rates down, buying easier” logic is straightforward: Lower borrowing costs reduce monthly payments and widen the pool of qualified buyers. And it can work under the right conditions, says Hannah Jones, senior economic research analyst at Realtor.com.
“It is possible for lower mortgage rates to make homes easier to buy without simply driving prices higher, but only under specific conditions,” she explains. “That requires rates not being fully capitalized into prices, which typically means more housing supply, weaker demand, and/or faster income growth.”
The problem is that the current housing market isn’t working with those ingredients. The most recent estimates show the U.S. is short roughly 4 million homes—a gap so deep that even modest rate relief can ignite buyer demand far faster than supply can respond. That imbalance tends to push any savings on buying costs into bidding wars rather than affordability gains.
“In a tight-supply market, falling rates mostly translate into greater bidding power, pushing prices higher rather than delivering lasting affordability gains,” adds Jones.
So rate cuts might make homes seem more affordable, but only if something else absorbs the shock. That could be more homes coming to market, softer demand, or stronger wage growth. Without that cushion, affordability becomes a moving target.
To understand the calculus, Jones points to the period of falling interest rates in 2020 and 2021, which coincided with short supply and a run-up in prices.
“Homeownership did rise during that period as low borrowing costs expanded access, but progress has since stalled as high prices and elevated rates returned. In general, lower rates boost transaction volume first, and homeownership rises only if supply keeps price growth in check,” she says.
Still, there are times when it’s worked and home prices have risen alongside affordability.
“There have been periods, most notably in the early 2010s recovery, when prices rose while affordability improved, driven by depressed starting prices and recovering incomes,” Jones says.
But that’s not today’s environment, she emphasizes. Home prices are near historic highs, we’re still an estimated seven years off from closing the housing gap, and incomes continue to trail inflation.
“Without stronger income growth or a meaningful increase in supply, lower rates are more likely to fuel prices than sustainably improve affordability, especially for first-time buyers,” Jones says.