For Atlantans priced out of the housing market, the prospect of mortgage rate cuts offered some respite.

A cut by a single percentage point can save consumers hundreds of dollars each month in principal and interest payments. In a city where the median home price is around $390,000, many prospective homebuyers were hoping a U.S. Federal Reserve rate cut in September was the start of a downward trend.

It didn’t quite work out that way.

Mortgage rates have inched up since, averaging 6.79% on Nov. 7, according to Freddie Mac. A recent report by real estate brokerage firm Redfin suggests recent volatility has come as investors react to the election, Donald Trump’s coming second term in the White House, and his proposed economic policies.

The Federal Reserve doesn’t set mortgage rates — that’s up to banks — but its decisions do influence them. In 2024, mortgage rates hit a high of 7.22% in May. In September, they dipped to their lowest level in two years at 6.08% for a 30-year conventional loan.

John Ryan, chief marketing officer for Georgia Multiple Listing Service, said that despite currently shifting rates, some economists believe they could be more stable in 2025.

“With the stabilization of interest rates, that’s going to give people a little bit more confidence in putting their house on the market,” Ryan said.

But there are reasons a Trump presidency could muddy the outlook.

The president-elect has said he will drive down interest rates to pandemic-era levels by reducing inflation and eliminating regulations that drive up costs. He has blamed a lack of housing on undocumented immigrants, who he says are straining the supply of affordable homes.

According to his campaign, Trump will free up federal land for more homes. In March 2023, he proposed a plan to build “Freedom Cities” and a national contest to charter up to 10 new cities through a plan he calls Quantum Leap.

“These cities will give hundreds of thousands of hardworking American families a new opportunity for homeownership and the American Dream,” his campaign website states.

But Redfin’s Chief Economist Daryl Fairweather argued that Trump’s greater “impact will be through the broader economy” rather than through housing policy. This could alter the landscape for homebuyers and developers in Atlanta and around the country.

Trump has proposed increasing tariffs on products from foreign countries and has said he could impose a 60% tariff on imported goods from China.

Fairweather said higher tariffs could lead to higher prices and inflation, keeping rates higher for longer.

The Trump tax cuts passed during his first term are set to expire at the end of next year. If Congress makes those tax cuts permanent, it could increase government spending and ultimately keep interest rates high, according to Redfin.

“If it’s a tax cut that coincides with a decline in government spending, that might not impact rates at all,” Fairweather told The Atlanta Journal-Constitution.

In February, economist Judd Cramer co-authored a paper on how borrowing costs could shape consumer sentiment. The paper suggested that President Joe Biden’s low approval rating, despite falling inflation and low unemployment, could be down to how Americans were feeling the pain from borrowing costs, including high mortgage rates.

Much is still unknown about how Trump’s economic policies could impact housing and the real estate market. But Cramer agreed that tariffs have the potential to lead to higher prices, which could mean the Fed would step in to try to tame them.

“The consensus among economists is these rising prices and rising deficits would both serve to make mortgages more expensive,” he said.

It’s not just homebuyers and owners in Atlanta who could feel the effects of Trump’s policies. Developers could, too.

Derrick Barker, an Atlanta-based real estate investor and co-founder and CEO of Nectar, a company funding multifamily and single-family real estate, argued that harsh immigration policies could restrict labor, making it more expensive to build housing.

Tariffs could lead to higher costs because the construction industry relies on imported materials, and Barker said it might be harder to finance affordable housing developments.

“Financing is driven by a lot of things. But one of the biggest things is interest rates,” he said.

Still, National Housing Conference president and CEO David Dworkin hopes rates could still come down, even as he observed that it seems the market is “already betting they won’t.”

“If rates go down, we’re going to find that housing is much more affordable, and that developers of affordable housing find it easier to build more,” he said.

High rates impact people who are staying put because they may be looking at doubling their interest rate if they move. That has created a “lock-in effect” and housing crunch due to a lack of available starter homes for the next generation of homebuyers.

However, Ryan suggested the picture is more nuanced in the metro Atlanta region because of the large equity gains people made as home prices in the region exploded.

“They may be able to go ahead and take that 6% interest rate but, because they’ve got more equity, put more into the down payment and bring that payment back down to where they can work with it,” he said.

This year, Fairweather was urging people to stay patient because she believed rates would eventually come down. Now, she says, “we’re in a holding pattern.”

There is a bright spot for sellers, according to the economist, because prices have already adjusted for higher rates.

“That’s not good news for buyers. But there’s really no reason to wait if home values are going to continue to increase and rates aren’t coming down,” she said.

This story has been updated to correct the 2024 mortgage rate high, which was previously stated as 8% when it was actually 7.22%