Will the Trump Administration’s Affordability Policies Jump-Start the US Residential Real Estate Sector?

No. The proposed policies are unlikely to swiftly resolve the challenges facing US residential real estate. While recent proposals may offer marginal support, they are not significant enough to improve deteriorating housing affordability. Given that most policy measures do not meaningfully address the core issues—limited supply and elevated mortgage rates—we do not expect a significant improvement in sector activity. As such, we continue to favor select opportunities in real estate credit and private residential real estate with compelling risk-adjusted returns and strong structural supports.

The US residential real estate sector remains a weak spot in an otherwise resilient economy, with residential investment contracting at a 4.4% annualized rate through the first three quarters of 2025. Affordability has worsened due to high home prices, elevated mortgage rates, and tight credit, all of which have dampened activity. Recent Federal Reserve easing has helped stabilize the market, lowering the 30-year mortgage rate by about 170 basis points since late 2023. However, a sustained recovery is likely to require a sharper decline in rates or a significant increase in supply, both of which are unlikely. Supply-side reforms are difficult to implement, and a substantial drop in rates does not appear likely, given the current macro environment. Mortgage rates are closely tied to long-term Treasury yields, which have limited room to fall unless the Fed eases more than expected or growth expectations weaken. Additionally, the spread between mortgage rates and Treasury yields has moved back near their historical average, leaving little room for further compression.

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