Since COVID, everything has skyrocketed in price. Food, gas, and of course housing have seen a cumulative increase of 55% since 2020. That is why President Donald Trump’s current administration has decided to take action on the matter. The government itself has declared that 2026 will be a year to “aggressively reform access to housing.”
To this end, the White House will attempt to strike a balance on two fronts: increasing supply through massive home construction and reducing monthly costs by artificially lowering interest rates. However, this raises the following dilemma… Can new buyers be helped if the wealth of people who own homes is reduced?
Present Homeowners vs. Prospective Buyers
Making it easier for young people to buy a home without affecting the real estate industry would be quite a feat.
That is why President Donald Trump has publicly admitted that there is a conflict of interest in this whole mess. On the one hand, young people need to be able to buy their first home—otherwise they will not be able to start a family and raise future generations of citizens—but he also does not want current homeowners to lose the value of their property.
The fact is that the real estate assets of the United States are an accumulated wealth of such magnitude that they have reached $35.8 trillion. A sharp drop in these prices would be politically disastrous. This is why the government is not seeking to create a break in the market, but rather to stagnate it in a controlled manner (if it is possible to help the economy artificially in some way). This is why experts’ forecasts suggest that housing price growth will be further limited to 0.5 percent… Which means that prices will remain flat in practice.
2026 Housing Reform
Let’s stop theorizing and talk about the measures the government has taken to promote housing: the first is the release of 1.5 million acres of federal land.
This land will be used for the development of new residential areas in western states such as Nevada. Apart from this, the government is pushing the Housing for the 21st Century Act, which pressures states to eliminate zoning laws that prevent the construction of apartment buildings. (Interesting note: states with more cumbersome legislation tend to be Democratic. The NIMBY phenomenon is real.)
The other major proposal is the controversial 50-year mortgage, an idea promoted by the director of the FHFA. This is a highly controversial measure that would reduce monthly payments by between $250 and $600, but would cause the total interest paid to almost double, from $438,000 on a standard loan to over $816,000. Finally, the option of “portal mortgages” is being investigated, which allows owners to sell their home and transfer their low interest rate from their previous mortgage—we are talking about 3% to 4%—to their new property.
Those God4%*&$ Tariffs!
Although it seems like we’ve been complaining about tariffs for a year now, they are a significant part of the increase in housing construction costs. Tariffs of 30% on softwood and finished products such as kitchen cabinets—no less than 50%—are cost additions that drive up the total amount to be paid for a newly built home. On average, each new home being built is costing $17,500.18, or $1,500 more. This increase in material costs could result in almost half a million fewer homes being built than planned by 2030.
FAQs
Will housing prices drop in 2026?
They are not going down… they are simply stabilizing and not skyrocketing so much anymore.
Are there even 50-year mortgages?
It’s a five-decades-long mortgage that lets you pay less each month… but you do end up paying double the amount of interest. Economists and finance advisors abhor this mortgage option.
How are tariffs affecting house construction
Wood (mostly imported from Canada at 85%) is currently subject to a 10% tariff. Steel and aluminum (from Canada, Brazil, Mexico, South Korea) are subject to a 50% tariff if imported. These are cost increases that make housing construction prohibitively expensive.