Our Housing Crisis Has Come to Rural America: Federal Budget Cuts and Climate Disasters Are Making it Worse

Today, the Consumer Federation of America released "Rural Homeownership Challenges: A Perspective from Eastern Kentucky," a report examining the housing crisis in rural America. While most housing research and reporting focus on large cities, rural communities - often seen as more affordable - also feel the effects of this crisis. The report relies on extensive interviews with locals and a ten-day site visit to Eastern Kentucky, as a window into rural homeownership challenges. It identifies major barriers to homeownership, including:

• Eastern Kentucky's rural housing stock needs significant repairs
• Many homes are family-owned and sold or rented informally; aggravating housing vacancy and repair needs
• A lack of buildable land in mountainous Appalachia limits new housing development
• Existing housing finance options do not meet local needs; there is a need for mortgages that include rehab financing
• Climate disasters increasingly threaten rural homes and communities

Kentucky, like many other states, faces a housing shortage. This shortage even exists while there are many vacant properties in rural communities: while cheap, these homes are often still too expensive for homebuyers to fix up, or to get a mortgage for that covers disrepairs. Research from the University of Kentuckyshows that one in eight homes in the state have at least one of four housing problems - overcrowding, high housing costs, lack of kitchen facilities, and lack of plumbing facilities. Even for dedicated buyers committed to finding a suitable home, navigating the informal real estate market and heir's property complicationspresents a significant barrier to ownership.

Voters in Eastern Kentucky overwhelmingly voted for President Trump, but his economic policies are worsening the housing crisis they hoped he would address. Since the research and writing of this report in late 2024. Eastern Kentucky endured another major flood, though FEMA and HUD disaster relief aid may not follow this time. The Administration has enacted sweeping cuts at federal housing agencies and programs. New tariffs are already driving up development costs. Under these circumstances, becoming and staying an Eastern Kentucky homeowner stands to become even more difficult.

The "Rural Homeownership Challenges" report highlights how a "thousand-year flood" in July 2022 damaged or destroyed almost 9,000 homes in Eastern Kentucky, exacerbating the area's affordable housing supply shortage. The Federal Emergency Management Agency (FEMA) and the U.S. Department of Housing and Urban Development (HUD) distributed recovery payouts for critical infrastructure and set up temporary housing, providing critical assistance to families who lost everything. In February 2025, another flash flood devastated Eastern Kentucky, with some communities reporting worse damage than from the 2022 floods. The flood was declared a federal emergency, even as the Trump administration preparedto cut staff numbers dramatically at HUDand FEMA, majorly undercutting the agencies' ability to administer relief to communities affected by these disasters.

Additional cuts at the U.S. Department of Agriculture (USDA) threaten to further limit mortgage access in rural areas. Through the Rural Development and Rural Housing offices, USDA works with local organizations and housing counselors to make homeownership more accessible. Local lenders in Eastern Kentucky reported that homeowners often used the USDA Direct Loan Program, which features flexible credit guidelines and does not require a down payment. Earlier this month, over 100 USDA office leases were terminated by the Trump Administration, including those that offer rural housing services.

And while these blows to critical housing assistance programs are enough to make experts worry, growing market uncertainty adds to the fear that housing will become even more unaffordable for rural communities. New tariffs on goods like aluminum, concrete, and HVAC systems are sure to raise already expensive building prices. Changes to immigration policy resulting in the deportation of workers in this industry are already raising labor costs. If experts are correct in their predictions for a looming economic recession, rural areas like Eastern Kentucky are bound to be hit hardest, due to its high poverty rates and joblessness. Addressing housing challenges without any federal support on top of recovering from a historic recession may be asking too much of these communities.

Rural communities deserve accessible and sustainable homeownership, which requires policy action to help repair the existing housing stock, build more housing, and provide lending products better suited to local needs.

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