President Trump told his Cabinet in January 2026 something that aspiring homeowners probably didn’t want to hear: he wants housing prices to rise. His exact words were blunt. “I don’t want to drive housing prices down. I want to drive housing prices up for people that own their homes.”

Meanwhile, Morgan Stanley is warning that affordable housing in the US may effectively never return to pre-2022 levels. The two positions together should concern anyone who doesn’t already own a home, which is roughly 35% of American households.

The policy math doesn’t add up for buyers

Trump’s administration has proposed a $200 billion purchase program targeting mortgage-backed securities from government-sponsored enterprises like Fannie Mae and Freddie Mac. Morgan Stanley, in a research note dated January 18, 2026, rated the GSE directive as only “modestly helpful” for improving affordability.

The analysts projected that mortgage rates would settle around 5.6% by the end of 2026. Home price appreciation, meanwhile, is expected to hold steady at roughly 2% annually.

The core problem is structural. Existing homeowners locked in mortgage rates during the pandemic-era lows, often below 3%. Selling their home means giving up that rate and buying into the current market at 5.6% or higher. So they don’t sell. And when they don’t sell, inventory stays tight, and prices stay elevated.

New housing inventory levels have actually climbed to their highest point since 2007. But the supply constraints driven by the rate lock-in effect continue to dominate the market’s dynamics.

A president choosing sides

Approximately 65% of US households own their homes. For those people, rising prices mean rising wealth, bigger home equity lines of credit, and a fatter nest egg for retirement.

Democratic opposition has seized on the remarks, highlighting affordability concerns as a wedge issue. The tension between protecting existing homeowner equity and expanding access for new buyers isn’t new, but previous presidents at least gestured toward affordability as a goal. Trump is openly saying the quiet part out loud: homeowners come first.

What this means for investors

The $200 billion GSE purchase program represents additional government support for the mortgage-backed securities market, a tailwind for fixed-income investors with exposure to agency MBS, even if it doesn’t dramatically shift the affordability picture.

Morgan Stanley’s projection of 2% annual home price appreciation suggests the bank sees a slow grind higher rather than a dramatic spike. The rate lock-in dynamic also creates an unusual situation for housing turnover. Lower transaction volumes mean fewer commissions for real estate agents, fewer mortgage originations, and less activity across the entire housing ecosystem.