Trump says he loves inflation as US housing market faces higher rates

President Donald Trump’s unexpected praise for rising prices – “I love the inflation” – landed on Wednesday, just days before the Federal Reserve’s policy meeting. The remark has turned heads in the housing sector, where buyers are feeling the squeeze of a cost‑of‑living surge.

“I love it. The numbers were great. You know what I really love? I love the inflation.”

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Donald Trump, President of the United States, via Yahoo Finance

The comment came after the U.S. Labor Department’s Bureau of Labor Statistics released the May consumer‑price index, showing inflation accelerating to 4.2 percent year‑over‑year – the highest reading since 2023. Energy prices rose by 3.9 percent in May after a 3.8 percent gain in April, pushing the national average gasoline price to $4.13 per gallon.

Economists say the data dramatically lowers the odds of a rate cut at the upcoming Fed gathering, and some now anticipate a hike instead. “The Fed’s next move may need to be a hike, and not a cut as many had expected coming into this year,” said Chris Zaccarelli, chief investment officer for Northlight Asset Management, in a statement to Newsweek.

Mortgage rates have already edged up since the start of the Iran‑related conflict, and with inflation expectations remaining sticky, “combined headwinds of elevated mortgage rates—likely to stay in the 6.5 percent range—and eroding real purchasing power will be a drag on demand heading into summer,” warned Realtor.com senior economist Jake Krimmel.

Housing market resilience under pressure

Despite these signals, the market has shown surprising stamina. Realtor.com economist Jiayi Xu noted that sellers are trimming prices to attract buyers, while pending sales have risen for a sixth consecutive month. Existing home sales climbed to a five‑month high in May, and the median asking price posted its steepest year‑over‑year decline since 2017.

Yet the optimism is fragile. “If inflation continues to outpace wage growth, eroding purchasing power alongside still‑elevated mortgage rates, household budgets will come under increasing pressure,” Xu added, echoing concerns from chief economist Jeffrey Roach of LPL Financial, who warned that a prolonged disruption of the Strait of Hormuz could keep energy shocks alive through Labor Day.

Political backlash and electoral stakes

Trump’s endorsement of inflation has sparked a firestorm within his own party. Former Congresswoman Marjorie Taylor Greene called the remark “shocking” and a “punch in the gut” for Americans struggling with bills, warning that it could become “a great big campaign ad for the 2026 midterms.”

Tariffs, trade and the broader cost‑of‑living puzzle

“Tariffs are often used as bargaining chips, leading to exemptions or scaled‑back versions during talks,” noted Joe Rodriguez, Associate Professor of Finance at Eastern Michigan University. The potential for higher consumer prices dovetails with the housing market’s own cost concerns, as higher duties on imported steel and lumber could push new‑home construction costs upward, according to Jean‑Baptiste Wautier of the Wautier Family Office.

Implications for homebuyers

For prospective buyers, the convergence of higher mortgage rates, elevated inflation, and looming tariff policies creates a “wait‑or‑act” dilemma. Industry observers also note that the housing market’s resilience may mask underlying stress. “Buyers and sellers are recalibrating and responding to the uncertainty in kind,” said Xu, pointing to a steep decline in median asking prices and a modest uptick in pending sales that could prove temporary if inflation remains uncontained.

Looking ahead

The housing sector now sits at a crossroads where geopolitical tension, domestic policy, and electoral politics intersect. As the Fed deliberates its next move, and as Republicans weigh the electoral fallout of Trump’s inflation cheer, homebuyers and sellers alike will be watching the Fed’s decision, the trajectory of the Iran conflict, and the rollout of any tariff framework.