Trump housing proposals don’t address biggest challenge 

The housing-related proposals that President Donald Trump announced last week are mainly focused on lowering mortgage rates and helping first-time buyers.

Meanwhile, questions remain about what the federal government will do to address the nation's housing shortage, which many economists say is key to improving affordability.

Housing-related policy shifts under consideration: Trump, who promised "aggressive housing reform" in 2026, has so far proposed a ban on corporate home purchases and vowed to buy $200 billion in mortgage-backed securities.

The Trump administration is also reportedly considering loosening restrictions on the use of retirement funds and college savings accounts for housing down payments, and allowing homeowners to take their mortgage rate with them when they move via portable mortgages.

Building new homes hasn't yet been mentioned as a major focus for the administration in terms of its plans to address housing affordability.

'Band-Aids' for housing's 'fundamental issue'?: While a portable mortgage plan could increase supply by enticing more sellers to put their homes on the market, potential buyers would still be left to compete for a limited number of homes — which will drive up prices — if there is no uptick in supply.

Studies vary, but several estimate that the nation's housing shortage is between 4 and 7 million units. While inventory did improve in 2025, levels remain well below what they were before the pandemic.

"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, in a Jan. 11 Wall Street Journal article.

During a Jan. 12 appearance on CNBC, Redfin CEO Glenn Kelman said last week's proposal announcements are "mostly Band-Aids." 

"The fundamental issue here is, we need more housing," Kelman said, adding that the federal government "is really focused on housing, so sooner or later we're going to figure it out."

More to come? New strategies aimed at addressing supply may be coming soon. According to the Wall Street Journal, Commerce Secretary Howard Lutnick has been asking builders about their preferred incentives.

Though Trump has said he wants to make housing more affordable, he has also claimed that there is a benefit in keeping home prices elevated, telling reporters last month that he wants homeowners "to continue to have a big value" within the property they own.

But it doesn't work both ways, according to Joel Berner, senior economist at Realtor.com. "For homes to become more affordable to first-time buyers, they must become less valuable to their owners," Berner said in a recent Realtor.com post. "This is basic economics and there's not much getting around it."

What do builders want? A variety of policy changes need to be made to boost supply, according to the National Association of Home Builders.

The association's 10-point plan aimed at addressing housing affordability challenges includes calls to eliminate excessive regulations, promote careers in skilled trades, fix building material supply chains and make it easier for developers to finance new housing.