During a press briefing aboard Air Force One on January 22, U.S. President Donald Trump conveyed his reservations regarding a plan proposed by his chief economic adviser, Kevin Hassett, which would enable Americans to tap into their 401(k) retirement savings to make down payments on homes.
Hassett had disclosed this initiative in an interview with Fox Business Network the previous week, outlining the Trump administration's intention to facilitate the withdrawal of funds from 401(k) accounts specifically for the purpose of purchasing residential property. However, President Trump did not share enthusiasm for this approach.
"I'm not a huge fan," Trump told reporters as he noted, "Other people like it." He cited the robust performance of retirement accounts as a key reason for his reluctance. "One of the reasons I don’t like it is that their 401(k)s are doing so well," he added.
Trump, who has a lengthy background in real estate, compared the yields of 401(k) investments favorably against the housing sector, remarking that these retirement portfolios have been "doing much better" than the real estate market. Supporting his observation, stock indices like the S&P 500 and the Nasdaq Composite saw gains of 16.39% and over 20%, respectively, in the previous year.
Amidst growing economic challenges and public concerns regarding living costs, Trump has prioritized enhancing homeownership rates and striving for reduced interest rates. This focus comes as the housing market continues to face headwinds due to soaring mortgage rates and elevated property prices, factors that have impeded many potential buyers and slowed transactions.
In line with these aims, Trump signed an executive order aimed at limiting the participation of large institutional investors in residential real estate purchases, seeking to alleviate competition with individual homebuyers and improve housing affordability.
Moreover, the president has directed the Federal Housing Finance Agency to acquire $200 billion worth of bonds issued by mortgage finance entities Fannie Mae and Freddie Mac, intending to temper mortgage rates. Concurrently, Trump has persistently urged the U.S. Federal Reserve to lower its benchmark interest rates.
Recent consumer inflation reports indicate that housing-related inflation remains elevated, continuing to affect affordability.
Market participants continue to monitor government policy adjustments, market dynamics, and interest rate trends that could rejuvenate buyer activity and potentially increase mortgage application numbers after a lengthy slowdown in the housing sector.
Nevertheless, some economists and analysts contend that insufficient housing supply remains a primary challenge. They argue that revisions to local zoning laws and construction regulations may have a more substantial effect on housing affordability, noting that lower interest rates could amplify demand and, without corresponding supply expansion, could push home prices higher.