Patrice Onwuka is director of the Center for Economic Opportunity at Independent Women and co-host of WMAL-FM’s O’Connor and Company.
In the first year of President Donald Trump’s second term, his administration and conservatives in Congress delivered a dose of financial relief to American households that is starting to kick in.
Affordability is a two-part problem: first, insufficient income to meet immediate expenses like gas, food and utilities; and second, rising housing costs that consume larger shares of disposable income, while pushing milestones such as homeownership and family formation out of reach.
Perception and facts don’t always line up. Consumer confidence in January slipped to its lowest level in 12 years, driven by pessimism about current and future economic conditions. However, Americans started 2026 in a stronger financial position than one year ago, as household net worth rose 8.3 percent from Q1 through Q3 of 2025. Although household debt reached a record high of $18.59 trillion, it was driven mostly by home loans, which comprises roughly 70 percent of household debt, not consumer or student loans. Overall, debt loads are manageable as spending on debt is below the historical average. Increased take-home pay and rising real wages complement the growth in assets that American workers are experiencing. All while inflation has largely stabilized at 2.7 percent.
Trump and Republicans have focused on addressing the income side of the affordability problem by passing the Working Families Tax Cuts, also known as the One Big Beautiful Bill. In 2026, income taxes are projected to fall by $220 billion and lift consumer spending by roughly $90 billion, adding 0.3 percent to gross domestic product.
Inflation adjustments to tax brackets from the bill are already delivering bigger paychecks, and financial experts are predicting larger refunds this season. Investment firm Piper Sandler estimates tax refunds will be on average $1,000 higher than usual this year, and the chief international economist at ING estimates tax refunds could be at least 30 percent higher.
The tax bill also rewards hard work. Six million tipped workers can earn up to $25,000 in tips tax free, and 20 million workers will be able to deduct up to $12,500 of overtime pay. This isn’t a benefit for billionaires and millionaires, but rather moms, students, semi-retirees, nurses, law enforcement and EMTs.
This major tax windfall and greater take-home pay are real income boosts that Americans can use to fund their own priorities and improve their quality of life. But the greater and more challenging task for conservatives and this administration is to bring down housing costs.
Shelter costs consume greater shares of the monthly household budget than the generally advised 30 percent, leaving consumers with less for daily expenses and savings. In 2024, Zillow found that homeowners with a 5 percent down payment spent 43 percent of their income on a mortgage. A record 22.4 million renters paid at least 30 percent of their income on rent and utilities, and about half of those paid more than 50 percent.
But lower mortgage rates are luring sellers back into the housing market. Mortgage applications are up, and existing-home sales rose at their fastest pace since 2023.
Policymakers should keep up the momentum through tax and deregulatory policies that expand the housing supply of new and existing homes.
Government policies over the decades have led to scarce and costly housing options. Restrictive zoning and land-use laws, opaque permitting processes, environmental laws and costly green initiatives pose major impediments to building new homes in America.
As I testified before the House Oversight Committee subcommittee hearing on Saving the American Dream, “regulation at all levels of government, from development to building, accounts for an estimated 24% of the total construction costs for single-family homes and 40% for multifamily homes.”
Additionally, energy efficiency mandates on consumer appliances hurt consumer choices and added as much as $31,000 to the price of a new home.
Congress must roll back these costly Biden-era energy mandates and should pass reforms that save time and money in home-building without sacrificing safety. The bipartisan Speed Act would reduce regulatory barriers in the permitting process for multifamily housing and streamline federal reviews of projects. The ePermit Act would digitize the permitting process. Other bills, such as the ROAD to Housing Act and the Revitalizing America’s Housing Act, aim to increase housing supply, affordability and access by designing model zoning codes and incentivizing states and local jurisdictions to permit more multigenerational housing types, which could lower rental prices.
Tax policies have also not kept pace with the growth of home values. Seniors are reluctant to sell their homes because of the potential tax bill keeping larger, family-sized homes off the market. There are a number of ways Congress can break this “lock-in” effect, including by increasing the capital gains tax exclusion for home sales from $250,000 to $500,000 for individuals ($500,000 to $1 million for couples), or at least indexing it to inflation. This change alone would lead to an increase in the amount of homes for sale.
One president can’t fix the entire affordability crisis any more than he can single-handedly fix the U.S. economy, but Trump and Congress are off to a great start.
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