Instead, Republicans have been plagued by a record-breaking 43-day shutdown, declining support for the White House’s economic and immigration policies, and polling that places Democrats in a strong position to flip the House next November.

Housing played a major role in the 2024 election, a race that largely centered on the cost of groceries and inflation. But both President Donald Trump and former Vice President Kamala Harris had made housing shortages a focal point of their campaigns in the final months of the presidential election.

Affordability is already becoming a major factor in this election season as well. The 2025 election, which yielded overwhelming victories for Democrats, centered on affordability and the cost of living. A large takeaway from the race was that both progressive candidates, such as New York City Mayor-elect Zohran Mamdani, and centrists, like Govs.-elect Abigail Spanberger and Mikie Sherrill, who were able to win handily by focusing on the economic issues that mattered most to voters despite being on different ends of the political spectrum.

“That’s really starting to come out in earnest,” Bankrate financial analyst Stephen Kates said in an interview. “So, I think these different ideas to help people who might feel like they’re not getting helped, or the economy has not been for them, I think that’s a good thing, and that’s probably something that Republicans will want to be behind and say that, ‘We are coming forward with solutions.’”

But, he noted, “maybe in a bit of a ‘spaghetti against the wall’ situation.”

Capital gains tax may have few benefits for average person

One of the GOP’s ideas for a second reconciliation bill, presented in an op-ed by Republican Study Committee chairman August Pfluger (R-TX), is to eliminate the capital gains tax on primary home sales “to expand the housing supply, convert underused federal buildings to residential use and promote mortgage portability so families aren’t trapped by rising rates.”

Currently, a married couple residing in their primary residence is eligible for a $500,000 capital gains exemption, while a single person residing in their primary residence is eligible for a $250,000 capital gains exemption. 

So, if a couple buys a home for $100,000 and then sells it for $600,000, they do not need to pay any taxes on the gain from the sale of the house. However, if a home is purchased for $100,000 and then sold for $900,000, only $500,000 would be exempt, and the couple would need to pay $400,000 in capital gains taxes.

But Kates says eliminating the capital gains tax would really only benefit families who own homes that have gains in excess of $500,000, and those people are likely to be wealthier. He noted that only 12 states have median home prices of $500,000 or more, and three — Massachusetts, Hawaii, and California — along with Washington, D.C., have prices of nearly $750,000 or more.

“Those are the states where you’re going to probably start to see that this could be a benefit, because, you know, a lot of homes that are sold, they were bought for some price, and they’re sold for now a much larger price,” Kates said. “But you’re going to need a pretty big, sizable selling price for any amount of this to be truly a benefit for somebody.”

Christy Setzer, Democratic strategist and president of New Heights Communications, told the Washington Examiner that there’s “nothing wrong” with the RSC’s proposal, as it would help some high earners get tax breaks on their home sales.

But, she said, the average age of a repeat home buyer is closer to retirement age, around 60, and with interest rates high and prices rising, “this issue just isn’t the alligator closest to the boat for most Americans.”

“If this were proposed along with rental assistance for lower- and middle-income earners, it would make Republicans seem less incredibly out of touch,” she suggested.

Kates agreed, noting that this proposal may not matter to the average person. 

“Eliminating capital gains is great if you expect you’ll owe capital gains taxes, and a lot of people in selling their homes are not going to pay it, because the exemption that already stands is going to cover it,” the Bankrate specialist said.

There are some benefits to the RSC’s capital gains tax proposal, such as helping to unlock some housing stock, as the United States faces a housing shortage. 

The U.S. Chamber of Commerce estimates that there is a “severe” shortage of 4.7 million homes. In 2024, existing home prices were 3.2% higher than they were in 2023, with mortgage rates near their highest rate since the turn of the century.

Housing remains a key problem for the middle class, especially in smaller cities, which are starting to see an influx of people moving out of major cities and looking to settle in suburban areas.

Kates said there are many families out there that are sitting on a home that’s too big for them, or that they don’t want or need, but they don’t want to pay capital gains tax. Instead, they pass it on to their children so they don’t have to pay taxes, which applies to most inherited assets, the expert said.

“So that if that was eliminated, then there might be people who say, ‘I don’t have to worry about those taxes, so I will sell it right now,’ and maybe they could even accept a slightly lower price, because now they don’t have to worry about the taxes,” Kates said.

How will this proposal play into 2026 messaging?

During the first reconciliation bill earlier this year, Democrats were quick to blast Republicans for prioritizing policies that only benefit the rich. Republicans argued that by extending the 2017 Tax Cuts and Job Act, they provided the largest tax cut in American history.

Are Democrats right about this proposal? Kates said they could “spin it that way very easily.” 

But, he said, any influx of new housing will help put downward pressure on prices.

“To say that this has no benefit at all isn’t intellectually honest,” the Bankrate expert said.

Kates said Republicans and the Trump administration could gain an advantage in the competition to address the housing affordability crisis and put downward pressure on prices by imposing a time limit on the capital gains tax. 

The administration could consider eliminating the capital gains tax for 12 to 24 months, rather than granting a blanket exemption indefinitely, which would spur sellers into action. 

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“If you said you have 12 months to sell this and you’ve got to sell it to an owner-occupier as opposed to somebody who’s going to make it an investment property, well, now people are going to have to move,” Kates said. “And now would put some incentive into introducing a lot more housing stock immediately and quickly.

“That would absolutely start to push prices down a little bit further,” the expert added.