Americans might be losing confidence in President Donald Trump‘s impact on the housing market as the majority of households prepare for rent and mortgage rate hikes.
A new report from the Federal Reserve Bank of New York found that households expect 30-year mortgage rates to increase to a median of 7 percent a year from now, signaling what could be a shift in confidence, and experts told Newsweek it could it’s about more than just mortgage rates.
Why It Matters
Home prices have skyrocketed in recent years as low inventory and pent-up demand made it increasingly difficult for the average American to purchase a home.
Mortgage rates saw a significant uptick after the Federal Reserve started raising rates to fight off inflation.
Analysts previously anticipated mortgage rates could get as low as 5 percent this year, allowing more homeowners to enter the market. However, current forecasts suggest that rates will stay between 6 and 7 percent throughout 2025 and most of 2026.
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What To Know
In the new Federal Reserve Bank of New York survey, households expected rent to grow by 8 percent over the next year. That’s compared to a 7.1 percent median expectation in February 2024, revealing Americans might be more apprehensive about housing now that Trump is in office.
Renters also said the probability of ever owning a home was just 33.9 percent in the survey, a decrease from the 40.1 percent they said last year. This probability of owning a home has been consistently decreasing since 2016.
Households also expected 30-year national mortgage rates to grow to a median of 7.0 percent both a year from now as well as in three years.
Home prices are still anticipated to grow over the next year, with the survey finding Americans thought they would increase by a median of 4 percent, up from 3.8 percent a year ago.
However, expectations over the five-year horizon remained flat, with households predicting a median annualized price growth of 3.1 percent, the same as in 2024.
What People Are Saying
Nationwide title and escrow expert Alan Chang told Newsweek: “The housing market has been unhealthy for the last several years. With unsustainable low interest rates driving up housing valuations for years, the market has been unbalanced for 5 plus years now.
“As interest rates normalize to the historical averages, buyer affordability has been much lower than in recent years which has propped up the neutral to negative consumer sentiment.”
Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek: “The past few weeks have seen a flurry of news on the housing market, with some data suggesting rays of light and others presenting a not-so-good outlook for the coming year. While those in real estate may feel optimistic about more inventory and slightly declining interest rates, this data shows that even those factors aren’t enough to generate more positivity from potential buyers.”
Noelle Tassey, the CEO and president of real estate agent platform Redy, told Newsweek: “It’s crucial to look beyond just rates—total inventory is up 17 percent year-over-year, and home prices continue to rise across all regions. We’re seeing a shift: more sellers are entering the market as we move into the traditionally busy season, and buyers are adjusting to the reality that mortgage rates aren’t likely to drop significantly anytime soon.”
“Rather than waiting for affordability to improve, many buyers are taking action now, recognizing that rising inventory provides more choices and slightly better negotiating power compared to the hyper-competitive markets of 2021-2022.”
Kevin Thompson, a finance expert and the founder and CEO of 9i Capital Group, told Newsweek: “Americans are growing less confident about housing, and it’s not just about high interest rates anymore. People are waking up to the reality that housing costs go far beyond the mortgage. Property taxes, homeowners insurance, maintenance—all of it is rising year after year. It’s starting to click for folks: buying a home isn’t just about getting approved for a loan. It’s about being able to afford the ongoing cost of ownership.”
Michael Ryan, a finance expert and the founder of MichaelRyanMoney.com, told Newsweek: “Young couples putting off that starter home. Families stuck in rental cycles. It’s like watching the American dream slip through their fingers, one decimal point at a time.
“How much of this is Trump’s doing? It’s complicated. His tariff talks and immigration policies are spooking homebuilders. The Housing Market Index dropping to 42? That’s more than just a statistic; that’s confidence evaporating.”
What Happens Next
If fewer Americans are able to afford home ownership, it’s reflective of less economic stability in the country, Beene said.
“While inventory may be going up and interest rates slightly down, prices in many major markets remain stubbornly high, and when you consider many Americans who rent are swamped with higher expenses on virtually everything else, it’s easy to see why fewer are seeing home ownership as a reality,” Beene said. “It’s very worrying, because home ownership has been closely associated with net worth for decades, and a reality with fewer homeowners is more than likely one with less economic stability.”
Tassey said the uncertainty of Trump’s administration makes it difficult to forecast the next four years with confidence.
“For first-time buyers trying to get into the market, that uncertainty creates an even bigger challenge,” Tassey said. “In addition to dealing with affordability and availability hurdles, they’re also at a disadvantage because they haven’t benefited from the massive appreciation in home prices over the past five years, whereas existing homeowners have built equity as values skyrocketed.”