How Trump’s Tariff Policy Could Shake Up the U.S. Housing Market

Former President Donald Trump’s newly announced tariff policy is once again sending shockwaves through the U.S. economy and housing market. On April 2nd, Trump announced plans to impose “retaliatory tariffs” on most trading partners. The market responded swiftly—stocks plunged for four straight days, with the S&P 500 dropping over 12%. An estimated $10 trillion in market value vanished.

Top financial leaders are sounding the alarm:

• JPMorgan CEO Jamie Dimon warned that the policy raises the likelihood of a recession.

• Moody’s chief economist Mark Zandi increased the probability of a global downturn to 60%.

• Billionaire investor Bill Ackman described the policy as a “self-destructive economic nuclear winter.”

  
  

What happens to housing during a recession?

Recessions often come with slowing job growth, rising layoffs, and higher unemployment. This weakens household finances, reduces homebuying demand, and lowers transaction volumes. When demand falls, listings accumulate and prices come under pressure.

But the housing market is already in a sluggish state. Home sales in 2023 hit their lowest point since 1995, and early 2024 hasn’t shown significant improvement. According to Realtor.com’s chief economic researcher, Hannah Jones, even if a recession hits, the impact on prices might be limited due to already weak demand.

The effects will vary by region:

• The South and West, where inventory is growing quickly, could see steeper price declines.

• The Northeast and Midwest, facing ongoing supply shortages, may experience more gradual price adjustments.

  
  

What about mortgage rates?

During recessions, money typically flows into bonds, driving down Treasury yields. Since mortgage rates often follow the 10-year Treasury, they’re also likely to fall. The Federal Reserve may also ease monetary policy to prevent further economic slowdown, pushing rates even lower.

However, lower rates won’t guarantee a housing rebound. If people are worried about job security, they may still hold off on buying—regardless of cheaper financing.

Bottom Line:

Trump’s tariff policy could cause both immediate shocks and longer-term shifts in the housing market. Whether you’re buying or selling, now is the time to re-evaluate your financial strategy. Talk to a local expert and make informed decisions in the face of uncertainty.