Donald Trump’s election victory has prompted economists to revise their housing market forecasts. Many now predict mortgage rates will remain elevated through 2025 due to the president-elect’s proposed trade and immigration policies.
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After Trump’s win, Redfin shifted its 2025 mortgage rate projection from 6.1% to 6.8%. “The difference is Trump,” Daryl Fairweather, Redfin’s chief economist, told Bloomberg. “The market seems to be pricing in that he’ll move forward with at least some of the tariffs, but it’s really hard to know what Trump will do.”
The potential impact stems from several key policy proposals. Trump’s planned tariffs—up to 20% on all imports and 60% on Chinese goods—could drive inflation higher as companies pass increased costs to consumers. Additional tax cuts might expand the national deficit, putting upward pressure on long-term interest rates.
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Capital Economics economist Thomas Ryan expects mortgage rates to hover around 7% through the end of this year, dropping just 0.25% by the end of 2025. “There was a view that rates would gradually fall, but that no longer seems to be the case,” Ryan told Bloomberg. “The housing market is going to stay frozen — as it is — for longer than we and other economists had expected.”
While the stock market rallied post-election, bond markets have shown more caution. Barclays economists raised inflation projections for the next two years while lowering economic growth expectations, citing tariff proposals and potential immigration restrictions.
The construction industry faces particular challenges under Trump’s immigration policies. “We need labor,” Nadia Evangelou, senior economist at the National Association of Realtors, told Bloomberg. “Sometimes homebuilders are not able to deliver affordable homes or the price point that people can afford to buy. And the reason is because of the labor shortage.”
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Mark Zandi, chief economist at Moody’s Analytics, suggests high rates could persist even longer. “I don’t think I’d count on mortgage rates coming down anytime until next fall, later next year,” he said. “And even then, I’m not sure. It really depends on what his policies are, how aggressively he pursues them.”
The market has already shown strain, with Redfin reporting increased time-on-market for homes.
Properties now sit for a median of 41 days, about a week longer than last year. Current 30-year mortgage rates reached 6.93% on Monday, marking four straight weeks of increases, according to data from Mortgage News Daily.
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This article Mortgage Rates Near 7% Are Here To Stay? How Trump’s Tariffs Could Hit Homebuyers Hard originally appeared on Benzinga.com
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