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By Suzanne Blake
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Democrats' midterm victory could bring a new wave of housing legislation to Washington as Americans continue to struggle with high home prices and elevated mortgage costs.
The housing market today has left many prospective buyers and sellers on the sidelines. In Home Depot’s most recent earnings call, CFO Richard McPhail said America is facing “frozen housing market conditions.”
However, now that Democrats won control of both the House and Senate in Tuesday’s midterm elections, prospective homebuyers are hopeful the tide could turn.
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Senate Democratic Leader Chuck Schumer outlined a five-part housing agenda earlier this year focused on lowering rents and increasing homeownership, and new congressional majorities could give Democrats the ability to turn some of those ideas into legislation beginning in January.
Why It Matters
The housing affordability crisis has increasingly become a problem for both buyers and sellers.
High mortgage rates have made monthly payments considerably more expensive for prospective buyers, while existing homeowners with much lower rates have had a financial incentive to stay put rather than sell and take out a new mortgage at today's higher rates.
The resulting "lock-in effect" has contributed to unusually low turnover and inventory. At the same time, years of inadequate construction, particularly of lower-cost starter homes, have left the country facing a persistent supply shortage.
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What Does the Democratic Midterm Win Mean for the Housing Market?
In the short term, there will probably be fewer changes than prospective homebuyers might hope.
Congress cannot simply order mortgage rates lower or force homeowners with ultra-low pandemic-era mortgage rates to sell.
Democratic control does, however, change which housing bills will receive committee consideration and floor votes. It could also put housing near the front of the new Congress' affordability agenda.
“Democrats are in favor of affordable housing, but they are also in favor of regulation, so that is a double-edged sword,” Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek. “Some believe regulation is one of the causes of lower production of affordable homes, given the profitability of building larger homes. There will need to be a constructive approach to bringing incentives and supply into equilibrium.”
After the election, likely House Speaker Hakeem Jeffries said Democrats were "laser-focused on addressing the affordability crisis that has been crushing everyday Americans."
And there is reason to think housing could produce more actual legislation than some other Democratic priorities.
What New Housing Proposals Could Democrats Pursue?
Build More Homes
Increasing supply is likely to be central to practically any Democratic housing agenda.
Schumer's Opportunity Starts at Home agenda explicitly calls for more housing construction, alongside policies to address rents and large corporate investors.
“No matter where you live in America, no matter if you’re a Republican, Democrat or independent, everyone worries about housing affordability,” Schumer said previously.
“When the rent or the mortgage is too high, you can’t afford much else. It squeezes every other aspect of your life.”
Democratic Senators Amy Klobuchar, Lisa Blunt Rochester and Tim Kaine also introduced the Housing Supply and Affordability Act this year.
The bill would establish a competitive federal grant program for states, cities and regional planning agencies developing housing strategies.
Invest More Federal Money in Affordable Housing
Beyond just increasing supply, progressive Democrats could push Congress considerably further.
Representative Yvette Clarke of New York introduced the Affordable Housing and Area Median Income Fairness Act of 2026 alongside Representatives Rashida Tlaib, Ayanna Pressley and Joaquin Castro.
The legislation would authorize $5 billion annually from fiscal 2026 through 2035 for the HOME Investment Partnerships Program in high-housing-cost areas, another $5 billion annually for qualifying Community Development Block Grant assistance and $5 billion a year for the Housing Trust Fund.
However, getting Trump to approve that level of new federal spending would likely be considerably more difficult than reaching an agreement on regulatory changes.
"Any federal action may fall victim to a divided government, as any new bills will have to gain the support of the White House to ultimately be approved," Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek. "Still, the Trump Administration has signaled in the past a willingness to entertain ideas for bringing new housing costs down, so there may still be some middle ground that can be found."
Help First-Time Buyers Get Into Homes
Democrats may also revisit assistance directed at the buyer rather than the builder.
The best-known recent Democratic proposal came from former Vice President Kamala Harris' 2024 presidential campaign, which proposed providing up to $25,000 in down-payment assistance to eligible first-time homebuyers and enhanced assistance for first-generation buyers.
Harris' broader housing agenda also called for building 3 million additional homes, providing tax incentives for builders of starter homes and expanding existing affordable-housing tax incentives.
Target Institutional Homebuyers
Democrats have also focused on the role large institutional investors play in the housing market.
Schumer's housing agenda included a pledge to confront what he described as predatory corporate practices.
On this topic, Democrats may find an unexpected area of agreement with the White House.
Trump issued an executive order in January aimed at preventing large institutional investors from acquiring single-family homes that could otherwise be bought by families, and his administration has called on Congress to codify that policy into law.
“Proposals like cracking down on predatory lending practices and increasing federal investment in low-income housing could do a lot to help,” Thompson said. “I think with control of the House and Senate, they could work to lower tariffs on lumber and steel, which could directly impact the cost of producing homes.”
Could Democrats Actually ‘Unfreeze’ the Housing Market?
Democrats could do many things to impact the housing market. They could increase federal housing investment, offer incentives for communities to remove barriers to construction, and even provide tax benefits to builders or buyers. However, it’s unlikely they could ‘unfreeze’ the housing market on their own.
That’s because they don’t have the power to shift the interest rate on a conventional 30-year mortgage.
So even an aggressive housing package would probably take years to significantly expand supply. Buyer subsidies could provide faster relief to individual households, but without additional inventory they would risk increasing competition for the homes already available.
“I think the housing market is in a bit of a stalemate at this time, given the fact that rates will remain stubbornly high and housing prices won't come down,” Thompson said.
“However, federal budget deficits have often fallen or grown more slowly under Democratic administrations, partly through tax policy. If that trend continues, you could see some money redirected toward housing from other areas of the federal budget.”
What Happens Next
Democrats will take control of Congress in January. At that point, the housing proposals floated during their campaigns can begin turning into actual legislation.
Contact Newsweek editors on this story: Gabe Whisnant, Gray R. Thomas
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