President Trump believes cutting interest rates will make homebuying cheaper, but experts say it’s not that simple. Fed Reserve Chair Jerome Powell’s decision on interest rates affects mortgage rates, which are a significant factor in high home prices.
Trump argues that lower interest rates would help people afford homes. However, experts like Robert Reich, former Labor secretary under President Bill Clinton and professor of public policy at the University of California, Berkeley, warn that such a move could backfire.
Lowering interest rates might make mortgages cheaper, but it’s not guaranteed to happen if investors doubt the Fed’s credibility in fighting inflation. This uncertainty could lead to higher mortgage rates. Additionally, if demand for housing increases without corresponding new builds, home prices may rise due to supply and demand imbalances.
The construction of new homes is already struggling, with builders requesting fewer permits and completing fewer units compared to last year. Tariffs imposed by the White House are also contributing to increased costs for building materials and equipment. To make a meaningful difference in reducing homebuying costs, experts suggest lowering tariffs, easing regulations, and increasing funding for housing initiatives.
While it’s easy to say that cutting interest rates will solve the problem, previous administrations have faced challenges in bringing down housing prices. A more nuanced approach is needed to address the complex issues driving high home prices.
Source: https://www.npr.org/2025/07/24/nx-s1-5477467/trump-federal-interest-rate-cut-home-buying