How a National Housing Emergency Could Open More Doors for First-Time Buyers

First-time homebuyers have all but disappeared, accounting for just 24% of sales in 2024, according to data from the National Association of Realtors®—a historic low and a troubling sign of the overall health of the market.

And now, President Donald Trump has vowed to step in. 

“Under the Trump administration, we believe that affordable homeownership is a fundamental part of the American dream, and we’re working every day to make that dream a reality for millions and millions of Americans,” he said in video remarks at a Department of Housing and Urban Development event on the National Mall on Monday.

So far, the administration hasn’t laid out specifics, but Treasury Secretary Scott Bessent suggested that "everything is on the table" in an interview with the Washington Examiner.

For first-timers who have been waiting on the sidelines for years, it’s welcome news. But without specifics, it's unclear what this beleaguered segment of buyers can expect in the months or years to come.

"The biggest challenge for first-time buyers today is affordability," says Daniel Smith, team lead at Smith Realty Team. "Home prices are at or near record highs, mortgage rates remain elevated, and entry-level inventory is extremely limited. Even financially qualified buyers often struggle to compete or save enough for upfront costs."

If it leads to real policy action, a national housing emergency could be the lifeline first-time buyers have been waiting for amid myriad challenges.

What is a national housing emergency—and has it been done before?

Declaring a national housing emergency is not unprecedented. The last time a president formally invoked one was nearly 80 years ago, when Harry Truman faced a severe housing shortage in the aftermath of World War II.

During the war, civilian homebuilding had been halted to prioritize defense needs. When veterans returned home, demand for housing far outstripped supply. Truman used the emergency declaration and the special powers associated with it to accelerate construction, expand rental assistance, and even fund research into new building methods to relieve the crisis.

But it’s unclear which powers Trump might tap to address the crisis today, and how such an action would be received.

“A national housing emergency declaration would grant the Trump administration broad, but perhaps controversial, power to bypass normal protocols and act swiftly as a federal government,” says Joe Ellul-Turner, a real estate investor.

By contrast, the 2008 subprime mortgage collapse—while certainly a national emergency—was not handled through executive powers. That relief came through laws passed by Congress, which has contributed to the reforms’ longevity. But congressional action requires negotiation and political consensus, which has so far proven out of reach for the many legislative proposals aimed at addressing the current crisis.

An emergency declaration, however, would enable the Trump administration to act unilaterally, albeit within legal limits. The question would no longer be if help was on the way—as many first-time buyers have wondered for years—but in what form it will arrive.

5 ways emergency powers could help first-time buyers

It’s not news that affordability is the biggest issue facing first-time buyers today. Without home equity to apply to their next purchase, even buyers with an otherwise strong financial profile can struggle to qualify for a mortgage.

But addressing affordability means taking on a host of issues, from an estimated shortage of nearly 4 million homes, high mortgage costs, and more. Here’s how a national housing emergency could address these challenges.

Freeing up federal land for housing

An idea the Trump administration has already floated to address the housing shortage is releasing federal land for new home construction. The American Enterprise Institute has proposed auctioning off 850 square miles of Bureau of Land Management land—enough, they estimate, to build as many as 3 million homes. 

Proponents argue that opening up this land could help lower entry-level home prices in parts of the West and Southwest, where land is more abundant and housing costs have remained stubbornly high. 

“Nobody’s living there today,” AEI’s Ed Pinto told MarketWatch. “That’s something the federal government could do to add supply.”

But experts caution that the impact would be limited.

“While releasing federal land could offer incremental gains in housing supply in select Western metros, it is not a comprehensive solution to the national housing crisis,” Realtor.com® senior economic research analyst Hannah Jones explained in July.

Most federally managed land is located far from job centers, lacks infrastructure, and can’t be developed at the density levels needed to make a national dent in affordability.

Pressure to reform local zoning

To boost inventory where demand is highest, some housing advocates are calling on the federal government to take a more active role in local zoning reform. While zoning laws are typically controlled at the city or county level, a national housing emergency could give the White House a platform to encourage local governments to legalize more affordable housing types.

“Easing zoning restrictions with federal support for states and municipalities to allow townhomes, duplexes, and accessory dwelling units could create more affordable options,” explains Smith.

The cost of starter homes has reached $1 million in some areas, as new projects get blocked by rules that mandate large lots, prohibit multiunit structures, or limit building height—even in areas with high housing demand. Federal zoning standardization could help legalize “missing middle” housing and shrink lot-size requirements, particularly in fast-growing suburbs where first-time buyers are being priced out.

Lowering closing costs

Even first-time buyers who qualify for a mortgage and have enough saved for a down payment miss out because they don’t have the upfront cash needed to close the deal. Closing costs run between 2% and 5% of a home’s purchase price, on top of the down payment, inspection fees, and moving expenses.

While specific proposals haven’t been announced, potential federal interventions could include fee waivers, direct subsidies, or caps on certain transaction costs—similar to some of the efforts authorized by Truman in the 1940s. In a tight affordability market, easing these friction points could open the door for millions.

(Maybe) lower mortgage rates

High mortgage rates continue to be a significant barrier to homeownership for first-time and repeat buyers alike.

“If buyers can't get approved for a loan, they move on to renting. To get buyers back in the game, they need to have easier access to a mortgage,” says Andrew Fortune, a real estate agent and owner of Great Colorado Homes.

While the Federal Reserve doesn’t set mortgage rates directly, an emergency declaration could ramp up political pressure on the Fed. Even then, a rate cut alone doesn’t guarantee mortgage relief—rates are more closely tied to the 10-year Treasury yield—but even small declines can make a difference for marginal buyers.

Offering down payment assistance

Targeted federal support for down payments could offer a fast-track solution. 

“In the short term, the most impactful solution would be targeted federal support for down payment assistance,” says Smith. “Many buyers can handle the monthly mortgage payment but are priced out by the initial cash requirements.” 

By bridging that gap, down payment aid could help more renters transition into ownership—and make a national housing emergency declaration feel tangible for millions of would-be buyers.

Or, in Fortune’s words, “The markets are slow from financing issues. That needs to be addressed first.”

What it means for first-time buyers in 2025 and beyond

A national housing emergency may sound dramatic to those who haven’t been following the market, but for those who have been living it, it can’t come soon enough. Such a declaration could elevate housing to a top-tier national issue—and help create momentum for reforms that have long stalled at the local level. And while sweeping change is unlikely overnight, even modest interventions—like trimming closing costs, unlocking new inventory, or expanding down payment support—could tip the scales for some buyers.