Making homes affordable again is easier said than done

The latest: "Last week, the average 30-year mortgage rate dropped below 6% for the first time in many years," the president said in Davos. (The rate, however, ticked back up yesterday, as markets reacted to Trump's threats to take over Greenland.)

• Trump also talked about one of the trickiest aspect of making homes more affordable: How to do it without bringing home prices down, which would hurt current homeowners.
• "I don't want to do anything that's going to hurt the value of people that own a house," he said.

The big picture: The housing market is kind of like an old joke Woody Allen tells in the 1977 movie "Annie Hall." One woman says, "Boy, the food at this place is really terrible." Her friend responds, "Yeah, I know, and such small portions!"

• Today, the homes on offer are "terrible" in that they're still overpriced after the pandemic-era housing boom. Mortgage rates are high on top of that.
• At the same time there aren't enough homes to buy: The U.S. still has a supply shortage.

Catch up quick: White House officials have waged a pressure campaign to get the Federal Reserve to lower interest rates, partly to lower mortgage rates. (The central bank doesn't directly set mortgage rates, but it does have a strong influence over them.)

And the White House has made other moves on housing, mostly to juice home buying demand.

• Trump on Tuesday night issued an executive order that outlines steps to banning institutional investors from buying single-family homes — but this would represent only a small fraction of the overall real estate landscape.
• Last week, White House economist Kevin Hassett said the president will propose allowing people to borrow 10% from their 401(k)s to use for a down payment.
• "President Trump pledged to improve housing affordability for Americans still reeling from Joe Biden's economic disaster, and the Administration is committed to exploring every tool possible to deliver for the American people," White House spokesman Davis Ingle tells Axios.
• "Reporters fixating on day-to-day market volatility are missing the forest for the trees," added spokesman Kush Desai.

Between the lines: Policies like the ones being floated might increase demand for homes, but they don't immediately address supply — and that could raise prices.

• They could even "reignite housing inflation," as TD Cowen analyst Jaret Seiberg wrote in a note earlier this month.

Yes, but: On the supply side, administration officials in the past have also suggested that deportations will free up homes to buy or rent — something Trump echoed Wednesday.

Flashback: In 2020, as the pandemic froze the economy, mortgage rates fell to historic lows — that helped drive rampant demand for homes. Prices spiked, and they've largely stayed elevated since.

The intrigue: Presidents ultimately have very little ability to push housing supply higher, that's something that happens at the local level.

• "It's really all about zoning and permitting, and the levers a president can pull are all on the demand side," says Chen Zhao, head of economics research at real estate site Redfin.

Between the lines: Homebuilders don't have much incentive to put up new houses. They're dealing with elevated construction costs, thanks to tariffs and inflation and less demand for houses.

• "Homebuilders are grumpy, for good reason," writes Carl Weinberg, chief economist of High Frequency Economics.

"It's not a bad thing to throw policy ideas out there," Moody's Analytics chief economist Mark Zandi says. "I think the administration's deserves credit for that."