Why didn’t Trump lower the price of housing during his Administration?

2016: An all-time low for mortgage rates

“2016 held the lowest annual mortgage rate on record since 1971. Freddie Mac says the typical 2016 mortgage was priced at just 3.65 percent”

“Rates plummeted in 2020 and 2021 in response to the Coronavirus pandemic. By July 2020, the 30-year fixed rate fell below 3% for the first time. And it kept falling to a new record low of just 2.65% in January 2021. The average mortgage rate for that year was 2.96%. That year marked an incredibly appealing homeownership opportunity for first-time homebuyers to enter the housing market. It also resulted in a surge in refinancing activity among existing homeowners”

“However, record-low rates were largely dependent on accommodating Covid-era policies from the Federal Reserve. Those measures were never meant to last. And the more U.S. and world economies recover from their Covid slump, the higher interest rates are likely to go”

“Thanks to sharp inflation growth, higher benchmark rates, and a drawback on mortgage stimulus by the Fed, mortgage rates spiked in 2022.

According to Freddie Mac’s records, the average 30-year rate jumped from 3.22% in January to a high of 7.08% at the end of October”

While it’s true that the White House doesn't set mortgage rates directly, the actions of the president and Congress significantly influences the broader economic environment that drives these rates. When the federal government engages in legislative overspending, often with the support or encouragement of the president, it typically requires large amounts of borrowing to finance these expenditures. This borrowing increases the national debt and injects more dollars into the economy, boosting the money supply. As the supply of money grows without a corresponding equal growth in GDP, inflationary pressures build up, diminishing the purchasing power of the dollar. When the money supply increases without a corresponding growth in GDP, it then leads to inflation. This is because more money is circulating in the economy, but the amount of goods and services available hasn’t increased. As a result, prices will predictably rise across the board, diminishing the purchasing power of the dollar. This mismatch between money supply and GDP growth is a fundamental driver of inflation.

To combat rising inflation, the Federal Reserve, which is responsible for controlling the money supply, will decide to raise interest rates. A higher interest rate is the tool used to reduce the money supply by penalizing borrowing by making it more expensive to borrow and encouraging saving over spending. When interest rates increase, it becomes costlier for individuals and businesses to take out loans, including mortgages. This is how legislative overspending, supported by the president, indirectly leads to higher mortgage rates—by triggering the Federal Reserve to raise rates in an effort to curb inflation.

In essence, the cycle works like this: the government overspends, often through fiscal policies promoted by the White House, leading to an increase in the money supply. Government fails to predict a GDP slow down. As inflation rises, the Federal Reserve steps in to prevent the economy from overheating by raising interest rates. These higher rates filter down into the economy, making mortgages more expensive. So while the White House doesn’t set mortgage rates directly, its policies create the economic conditions that lead to higher borrowing costs for everyone.