Donald Trump Has a Plan to Fix Housing - But Experts Say It May Fall Short

Housing affordability remains one of the biggest financial challenges for Americans, and the pressure isn't easing. Home prices are still elevated, mortgage rates remain relatively high, and inventory is tight across much of the country, leaving many renters searching for ways to help pay rent while they wait for conditions to improve.

Against that backdrop, Donald Trump has outlined a plan aimed at making housing more affordable, with a strong focus on cutting regulations to boost supply. The strategy is gaining attention, but analysts say it may not be enough to solve a problem that has been building for years.

The idea behind the plan

At the center of the administration's approach is deregulation. The White House argues that zoning laws, permitting delays, and other restrictions act as a "bureaucratic tax" on homebuilding. According to its estimates, those costs can add more than $100,000 to the price of a typical single-family home.

By reducing those barriers, the administration believes builders could construct more homes faster, increasing supply and easing price pressure over time. In theory, more homes on the market would help bring prices down and improve affordability for buyers.

The housing shortage

However, the challenge is much bigger than many people realize, with analysts at UBS estimating the U.S. may be short by as many as 10 million homes, far higher than earlier estimates that placed the gap closer to 7 million.

That level of shortage suggests the housing market isn't just tight, it's structurally undersupplied. Even aggressive building efforts would take years to close a gap of that size. As a result, prices could remain elevated even if policy changes start to improve conditions.

Deregulation alone may not be enough

While loosening regulations can help, it doesn't address every constraint. UBS analysts described the administration's approach as directionally right but unlikely to provide the kind of rapid boost the housing market needs.

The reality is that homebuilding depends on more than just rules. Labor shortages, material costs, and financing conditions all play a role. Even if regulations are reduced, builders still face challenges that can limit how quickly new homes are brought to market.

Local control limits federal impact

One of the biggest obstacles is who actually controls housing policy, as most zoning and land-use decisions are made at the local level, not by the federal government. That means any national strategy relies heavily on states and municipalities choosing to follow those recommendations.

In practice, that creates uneven results. Areas with the strictest regulations, such as California, are often the least likely to adopt sweeping changes, which limits how much impact federal policy can have overall.

The "lock-in" effect is freezing the market

Another major issue has little to do with regulation at all, given that a large share of homeowners currently have mortgage rates below 5%, locked in during earlier years when borrowing costs were much lower. Selling a home today often means taking on a much higher rate, which discourages people from moving.

Analysts at firms like Morgan Stanley have pointed to this "lock-in" effect as a key reason inventory remains low. On top of that, roughly 40% of U.S. homes are owned outright without a mortgage. Together, those factors reduce turnover in the housing market, keeping supply constrained even without regulatory barriers.

What that means for home prices

Even if new construction increases, it may not be enough to offset the lack of existing homes coming onto the market. Buyers are competing for a relatively small pool of available properties, which keeps prices elevated.

Limited supply continues to put upward pressure on prices, which helps explain why the housing market has remained sluggish for nearly three years, with expected rebounds failing to materialize.

Ideas to improve affordability

Some analysts believe other tools could have a more immediate impact, with UBS pointing to the role of government-backed mortgage entities like Fannie Mae and Freddie Mac. Increasing their purchases of mortgage-backed securities or reducing certain fees could lower borrowing costs for buyers.

Lower mortgage rates would make homes more affordable on a monthly basis, which could help stimulate demand and encourage more market activity. However, those measures come with their own trade-offs and are not part of the current strategy.

Outlook for buyers and renters

For consumers, the outlook remains challenging as buyers may continue to face high home prices and limited inventory, even if new policies begin to take effect. Renters could also see continued pressure, since a tight housing supply often pushes more people into the rental market.

Any meaningful improvement is likely to take time. Closing a multi-million-unit housing gap is a long-term process, not something that can be solved in a single policy cycle.

Bottom line

With the U.S. potentially short by as many as 10 million homes, the scale of the problem is far larger than deregulation alone can fix. That means affordability is likely to remain a challenge, with prices staying elevated and any relief coming gradually.

Households trying to avoid dumb money moves may need to stay cautious, since the gap between policy goals and market reality means housing affordability is likely to remain a challenge, with prices staying elevated and relief coming gradually rather than all at once.

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