Trump Claims ‘Most Aggressive Housing Reform in History’ Will Lower Costs

President Donald Trump again vowed to cut housing costs and dangled the promise of dramatic action to address the affordability crisis while making a special address to the nation on Wednesday.

"Mortgage payments will be coming down even further early in the new year," Trump said in his speech from the Oval Office. "You will see this in the new year, I will announce some of the most aggressive housing reform plans in American history."

It is not the first time Trump has promised drastic action on housing costs, after signing an order for "emergency price relief" on the first day of his second term, and floating plans for declaring a national housing emergency this fall, which never materialized.

Trump also raised the idea of a new 50-year mortgage last month, but appears to have quietly retreated from the plan after furious backlash within his own conservative base.

Trump's new promise comes as his administration increasingly focuses its domestic agenda on affordability, an issue which helped him win in 2024, but threatens to derail his Republican Party in the midterms unless inflation-weary voters begin to feel relief.

It's unclear what housing reforms Trump is planning, but he could be referring in part to new bipartisan legislation in the House that passed out of committee on Wednesday and could land on the president's desk by early 2026 if all goes according to plan.

The bill, dubbed the Housing for the 21st Century Act, includes a number of measures aimed at streamlining the permitting process for new homes and has been widely praised as a positive step by trade groups for homebuilders and other real estate professionals.

"It's hard to infer what the president's plans might be from one line in the speech," says Realtor.com® Senior Economist Jake Krimmel. "But given the proposed legislation plus the slew of recent ad hoc proposals on mortgages, my guess is housing affordability takes center stage in 2026."

Trump touts lower mortgage rates

Trump also plans to announce his nominee for the next Federal Reserve chair in early 2026, several months before current Fed Chair Jerome Powell's term expires in May.

"I'll soon announce our next chairman of the Federal Reserve, someone who believes in lower interest rates by a lot," Trump said in his address on Wednesday.

Trump has aggressively pushed the Fed to cut its short-term policy rate, and will undoubtedly select a Fed chair who agrees with his vision of easier monetary policy. However, the Fed does not directly control mortgage rates, which hinge on market expectations for future inflation rates.

New inflation data released on Thursday will give a boost to Trump's message, showing that annual inflation dropped to 2.7% in November, with core inflation hitting a four-year low of 2.6%.

That could provide modest relief for mortgage rates, which averaged 6.21% this week according to Freddie Mac, down from 6.96% when Trump returned to the White House in January.

In his special address, Trump highlighted falling mortgage costs under his second term, again sharing a chart that claimed typical annual mortgage costs have fallen by more than $2,900 since January, after rising more than $14,600 under President Joe Biden.

"The Democrat inflation disaster, again, the worst in the history of our country, also robbed millions of Americans of home ownership, and indeed the American Dream," said Trump.

Trump said that under his administration, mortgage costs are "coming down a lot lower—when you see, the numbers are going to be shocking."

The chart, which Trump first shared in Pennsylvania last week, is largely accurate regarding mortgages for newly built homes, which have fallen in price as homebuilders offer discounts in a weak market.

However, based on existing-home prices, which account for 90% of all home purchases, the savings under Trump so far drop to about $540 annually, or about $45 per month.

That's because existing-home prices have remained much stickier than new-home prices, with many individual sellers unwilling to cut a deal, instead choosing to pull their homes off the market.

Falling mortgage rates have offered some relief to homebuyers, and existing-home prices are expected to grow slower than wages next year, modestly improving affordability.

But the typical mortgage payment remains more than 80% higher than it was when Biden first took office, a gap that will be virtually impossible to close through lower mortgage rates, and could take rising wages more than a decade to offset.

Trump says immigration to blame for soaring housing costs

In his remarks, Trump also touted his immigration crackdown as a positive development for the housing market, arguing that illegal immigration had vastly driven up housing costs.

"A major factor in driving up housing costs was the colossal border invasion. We have never been invaded. This is the worst thing that frankly, in my opinion, the worst thing that the Biden administration did to our country is the invasion at the border," said Trump. "Your rent and housing costs skyrocketed—over 60% of growth in the rental market came from foreign migrants."

Trump appeared to be referring to a recent study from the Department of Housing and Urban Development, which claimed that the foreign-born population accounted for two-thirds of rental demand growth from 2021 to 2023.

According to a HUD official, that claim is based on an analysis of U.S. Census data, but it has not yet been independently verified by Realtor.com.

There are academic studies demonstrating that increased immigration in a city is associated with higher rents, with some estimates finding a 1% population increase from immigration can raise rents by about 1%.

However, economists say the relationship is complex, because immigrants also make up a large share of the residential construction workforce, helping to build new homes that add to supply.

The Trump administration has touted the fact that rents have fallen in recent months as proof that his crackdown is lowering costs. Asking rents fell an estimated 1.4% nationwide this year and are expected to fall another 1% in 2026, according to the Realtor.com national housing forecast.

The forecast attributes falling rents to robust growth in new multifamily units hitting the market, following a construction boom in 2022 and early 2023.

The economist Krimmel says he hopes the Trump administration will focus its affordability policies next year on further expanding housing supply and reforming zoning and land-use rules.

"Housing markets are made up of many municipalities and often cross state lines," he says. "If the federal government can convince states and localities to change not only their zoning policies but also their permitting processes, that would represent a huge win."