JUANA SUMMERS, HOST:
In the last few days, we've heard a lot that this was a pocketbook election, that the top issue for voters was the cost of living and their economic prospects. And top of mind there for many people is this question. Am I ever going to be able to afford a house? Well, President-elect Trump is now headed back to the White House, so how might the housing market change? Let's hear from NPR housing correspondent Laurel Wamsley. Hey there.
LAUREL WAMSLEY, BYLINE: Hey, Juana.
SUMMERS: So, Laurel, we know that the cost of housing was a huge campaign issue, but how did it get to be this expensive?
WAMSLEY: Well, the housing market really changed during the pandemic. As you might remember, there was this big spike in demand as people wanted more space. And mortgage rates at the time were super low, and then prices spiked with that demand, and now prices are still high. There was hope that mortgage rates would be dropping by now, but that happened only briefly before they just started rising again.
The Fed cut interest rates by a quarter point this week, but it's not really making an impact on mortgage rates, and housing supply overall just hasn't kept up with the demand. So all of this really affects how people feel about their financial future. Buying a home has, like, always been this cornerstone of the American dream, and now that's becoming out of reach for a lot of people.
SUMMERS: OK, looking ahead to the new administration, what has Trump said that he will do to address these housing costs?
WAMSLEY: Right. Well, he's talked about a few different things. One is bringing down mortgage rates, and another is deregulation to make it cheaper to build homes. So on the mortgage rate issue, Trump says he will slash inflation and mortgage rates will drop. But it's not as easy as he makes it sound, and many experts say that Trump's economic plans will actually be inflationary.
And I want to note that mortgage rates aren't set by the Fed, and they aren't set by the president. They tend to follow a number of factors, including what's happening in bond markets. And right now, despite the Fed's cuts, mortgage rates are still pretty high. And then when it comes to deregulation, the reality is that much of that red tape that does make it hard and expensive to build housing are at the state and local level, not federal.
SUMMERS: Right. So, Laurel, are there other federal actions a Trump administration could take here other than deregulation?
WAMSLEY: Well, another idea that Trump has pushed is opening up some federal lands for housing. For this, think about wide-open spaces out west but not national parks. But a lot of this federal land isn't super close to metro areas that really do need the housing, so this might not move the needle too much.
SUMMERS: Another key Trump campaign issue was immigration, and Trump blamed undocumented immigrants for driving up housing costs. What do economists make of that claim?
WAMSLEY: Well, there is some effect from immigration on housing prices, just as there is with any population growth. But experts say that the Trump campaign overstated the impact. Here's his running mate JD Vance during the vice presidential debate.
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JD VANCE: We have a lot of Americans that need homes. We should be kicking out illegal immigrants who are competing for those homes, and we should be building more homes for the American citizens who deserve to be here.
WAMSLEY: If Trump does move forward with his plan for mass deportation, it'll have a number of effects on the housing market depending on exactly what he ends up doing.
SUMMERS: Give me some examples.
WAMSLEY: Well, carrying this all out would likely cost the federal government a lot of money, and that spending could lead to higher mortgage rates. And construction costs would probably go up since some of those who might be deported are people who work in home building. On the other hand, if millions of people really are forced to leave the country, that would obviously open up some homes, though it's not really clear how many since some migrant families do double and triple up in the housing that they can find.
SUMMERS: All right, Laurel, what are you watching for next?
WAMSLEY: Well, there's data out this week from the National Association of Realtors that suggest that the worst might be over. Home prices are rising more slowly now, and rising wages are outpacing them. And more inventory and new homes are coming onto the market. But housing affordability is still pretty bad. But the big picture here is that the president can certainly make an impact on affordability. But the housing market is really complex, and the problems that we're facing right now were long in the making, and they're going to be long in the solving.
SUMMERS: NPR's Laurel Wamsley. Thank you.
WAMSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.
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