The recent victory of President-elect Donald Trump has had a significant impact on the U.S. housing market, particularly in terms of mortgage rates. Following the election, the U.S. 10-year Treasury yield rose, leading to an increase in mortgage rates, which are closely tied to the benchmark yield.
According to Mortgage News Daily, the average rate on a 30-year fixed mortgage jumped 9 basis points to 7.13%, the highest rate since July. This surge was in line with expectations among bond traders, who anticipated higher rates in the event of a Trump victory.
The housing sector reacted swiftly to the news, with stocks of big public builders and building material companies taking a hit. Companies like Lennar, D.R. Horton, and PulteGroup saw their stocks fall by more than 4%, while retailers Home Depot and Lowe's also experienced declines of over 3%.
President-elect Trump has not yet outlined a detailed housing plan, but has mentioned deregulation and opening federal land for more home construction. The National Association of Home Builders expressed optimism about working with the incoming administration to address housing supply and affordability issues.
Despite recent rate cuts by the Federal Reserve, mortgage rates have been on the rise due to stronger-than-expected economic reports. This has led to an increase in monthly payments for homebuyers, with a $216 difference for a $400,000 home with a 20% down payment on a 30-year fixed mortgage.
Sales of existing homes have seen a surge this fall, attributed largely to an increase in supply. Pending sales rose by 7% in September compared to August, and active inventory reached its highest level since December 2019.
Looking ahead, the future of the housing market remains uncertain and will depend on factors such as inflation, the economy, and Treasury issuance. As the situation continues to evolve, stakeholders will need to closely monitor these developments to navigate the changing landscape of the housing market.