Trump Considers Declaring a U.S. Housing Emergency

If homeownership is a crucial component of the American Dream, it’s a dream deferred for far too many Americans. Housing has become a crisis in the U.S. in the 2020s, and President Donald Trump is preparing to take action on this unavoidable issue.

According to Treasury Secretary Scott Bessent, the Trump administration is currently considering declaring a national housing emergency in order to address the issues of high housing prices and limited inventory. “We may declare a national housing emergency in the fall,” Bessent revealed.

Declaring an emergency might seem like an extreme measure to anyone fortunate enough to have paid off their home entirely, or to anyone who got a pre-COVID 3%-to-4% mortgage interest rate. The massive amount of pandemic stimulus, combined with low interest rates at that time and a shift to remote work, supercharged home prices after COVID-19 struck the U.S.

Thus, the housing affordability crisis shifted into high gear and the wealth gap widened rapidly in the early 2020s. Median U.S. incomes fell slightly during this time, yet median new-home prices increased by nearly $63,000 in just two years.

Courtesy: @barchart

This isn’t to suggest that inflation-adjusted home prices only started to balloon in the year 2020. Previous cycles also contributed to the problem, including the 2000-to-2006 housing boom, which pushed the ratio of home prices to median incomes from 4.3 to 5.4 in just six years.

To put those figures into perspective, in 1970, the ratio of the U.S. median household income to the median home process was just 3.19. In 2004, this ratio surpassed 5x for the first time; in 2023, it was 5.32.

Looking at it from a different angle, the median sales price of a new U.S. home was $428,600 in 2023, more than five times the median household income of $80,610 that year. To make matters worse for prospective home buyers, the Federal Reserve has been reluctant to ease borrowing costs in 2025 and the typical mortgage interest rate still stands at around 7% now.

Compounding this problem, many homeowners who locked in 3%-to-4% interest rates a few years ago are refusing to sell their homes now. This phenomenon, known as the “lock-in effect,” is a primary reason that for-sale housing inventory remains depressed.

And of course, the climb of home prices has outpaced wage growth for Americans. Home values have tripled over the past 25 years, but median incomes from 2000 to 2023 didn’t quite double.

Courtesy: Liz Ann Sonders

And in a startling turn of events, the nation’s population of homeowners just shifted from growth to contraction. In the second quarter of 2025, for first time since 2016, number of homeowner households in America declined by 0.1% year-over-year, to an estimated 86.2 million.

So, as economist Paul Krugman summed it up, “Yes, America has a housing emergency.” Moreover, this problem isn’t limited to just a few U.S. cities, as Krugman observes that “we’re looking at a truly national phenomenon.”

Unfortunately, there are some things that the Trump administration cannot control but which would certainly alleviate America’s housing affordability crisis. In particular, Bessent pointed out that interest-rate cuts by the Federal Reserve would be helpful for bringing housing prices lower.

However, Bessent mentioned that White House officials are evaluating ways to standardize local building and zoning codes as well as decrease closing costs. Along with that, the Trump administration may consider some tariff exemptions for certain construction materials in order to reduce costs.

For families looking to live in a new home, relief in the form of more affordable housing couldn’t come soon enough. In the meantime, Americans will have to grapple with a dream that’s quickly but relentlessly slipping away.