President Donald Trump has often accused the Federal Reserve of “hurting people” and preventing Americans “from buying houses” by keeping interest rates elevated. (1) However, at a recent press conference, Chairman Jerome Powell argued that simply slashing the cost of mortgages won’t solve the real reason why American homes continue to be stubbornly unaffordable.

“Housing is going to be a problem,” Powell said, shortly after announcing a 25 basis point cut to the Federal Funds rate on December 10. (2) “We can raise and lower interest rates, but we don’t really have the tools to address a secular housing shortage, structural housing shortage.”

A lack of supply, according to him, was still one of the most “significant challenges” facing the country’s potential homebuyers, casting doubt on whether cutting rates would “make much of a difference for people.”

Here’s why experts agree that housing won’t be affordable unless it is also abundant.

Since the Great Financial Crisis, the number of households formed has outpaced the number of homes being built and completed across the country, according to Goldman Sachs. (3) This lack of supply has created a chronic shortage, that experts estimate to be somewhere between 1.5 to 5.5 million units.

Goldman estimates that closing the gap will require an additional three to four million units. Similarly, JP Morgan believes it would take an additional 2.8 million units to close the gap, an effort that could take at least 10 years. (4)

Speeding up the process isn’t easy. Goldman points to restrictive zoning rules that make it difficult to build new housing in many urban centers, while JP Morgan highlights the fact that an era of cheap mortgages has made many homeowners reluctant to move.

“About half of current U.S. mortgage borrowers are still enjoying sub-4% rates, and about 80% are paying under 6%, creating a “locked-in” effect — there’s little incentive to sell and take on a higher payment, keeping existing home inventory at historic lows,” says the report.

The Trump administration’s policies are slowing the process down further. Tariffs on essential building materials such as lumber have made some construction projects less commercially viable. The Center for American Progress estimates 450,000 fewer homes will be built by 2030 as a direct result of this trade war. (5)

Meanwhile, cuts to immigration are widening the labor shortage in the construction industry and pushing labor costs higher for developers, according to the Urban Institute. (6)

Simply out, there are multiple fences (beyond interest rates) between a young family and their American Dream of homeownership. If you’re struggling with the housing crisis, there are ways to beat the odds and protect your finances.

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Despite the housing shortage and escalating prices of new homes, many young Americans try to get on the property ladder by stretching their budgets or borrowing too much. This approach could put you and your family at great financial risk.

Instead, consider delaying your home purchase to save up a sizable downpayment. Buying a home you can afford in your 40s is better than getting trapped in an unsustainable debt burden in your 30s or 20s.

By renting for longer, you could save more money. According to a June, 2025 report by Realtor.com, renting is cheaper than buying in 49 out of the 50 largest cities in the country. (7) So signing a lease could be a financially savvy move for many urban families.

But if waiting and renting isn’t for you, perhaps moving to another part of the country could solve your housing needs. Better zoning rules and a robust construction sector has made some cities relatively more affordable for potential homeowners. According to Realtor.com, Pittsburg is the most affordable city for young homebuyers, followed by Decatur, Illinois; Enid, Oklahoma; and Mission, Texas.

If you can find a job or, better yet, work remotely, moving to an affordable city could be a game changer for your personal finances.

We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

The Heritage Foundation (1); YouTube (2); Goldman Sachs (3); J.P. Morgan (4); The Center for American Progress (5); Urban Institute (6); Realtor.com (7)

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.