Suzanne Blake of Newsweek discusses the impact of a forthcoming Trump Presidency on housing, highlighting that it could have mixed effects. With Republicans securing the presidency and likely a majority in Congress, Trump may swiftly pursue supply-side policies, including easing housing regulations and potentially opening federal lands for development to address a longstanding home shortage. Although these actions could increase supply, experts warn that Trump’s push for lower interest rates may fuel demand and, in turn, drive up home prices further. 

Chris Clow of HousingWire discusses the topic of the Department of Housing and Urban Development (HUD), reporting that the policy document Project 2025—crafted by The Heritage Foundation—could heavily influence its future. The plan, led by former HUD Secretary Ben Carson, seeks to reshape HUD by replacing career officials with politically aligned appointees, reversing Biden-era policies, restricting certain housing assistance, and increasing FHA mortgage insurance premiums on longer-term loans. Though Trump distanced himself from these proposals during the campaign, allies now signal they may drive substantial HUD changes aligned with a conservative agenda.

Diana Olick of CNBC reports rates, noting that mortgage rates jumped to 7.13% following the election victory, driving down housing and building material stocks as higher rates impact affordability and dampen buyer interest. Builders like Lennar, D.R. Horton, and PulteGroup saw sharp declines, as did retailers Home Depot and Lowe’s. Despite no specific housing plan, Trump’s talk of deregulation and increased federal land access for construction offers some optimism among builders. However, rising rates could challenge affordability even with more homes available.

Keith Griffith of Realtor.com highlights that Trump’s return to the presidency raises hopes for deregulation and increased homebuilding, but experts are skeptical that his proposals will meaningfully address the housing crisis. Though reducing red tape and opening federal lands could slightly ease housing costs, Trump’s plans for mass deportations and tariffs could hurt labor availability and raise building costs, potentially worsening supply issues.

Breck Dumas of FOXBusiness agrees, reporting that while Trump’s plans to cut regulations could lower construction costs and boost housing supply, his proposals to reduce immigration and increase tariffs may backfire on the market. Lower immigration could shrink the labor pool critical for homebuilding, and new tariffs on imported building materials like cement and steel could drive up costs. While lower mortgage rates could unlock the market for homeowners and buyers alike, these conflicting policies create uncertainty about the overall impact on housing affordability.

Housing sales and inventory

Dana Anderson of Redfin reports on pending home sales, highlighting their resilience leading to the presidential election. Sales rose 4.3% yearly despite 7% mortgage rates and economic uncertainty. While some buyers postponed their searches until after the election, many adjusted to high rates by modifying their budgets. However, Redfin’s Homebuyer Demand Index dipped to its lowest since September, indicating caution among early-stage buyers. New listings saw minimal growth on the selling side, as some sellers waited for post-election clarity before entering the market.

Source: Redfin (November 2024)

Logan Mohtashami of HousingWire reports on housing inventory, noting that it saw a significant drop during election week, with both active listings and new listings declining, a trend that the timing of the election may have influenced. Active inventory decreased from 735,718 to 721,576, and new listings hit a historic low for this time of year, reflecting both seasonal patterns and potential seller hesitation. Despite the dip, 2024 has shown steady, modest inventory growth, providing a buffer if mortgage rates drop below 6% and demand rises.

In August, the CoreLogic S&P Case-Shiller Index showed annual home price growth slowing to 4.25%. This reflects a continued cooling in the housing market, particularly in the West and South, where affordability challenges are high. Although a temporary dip in mortgage rates spurred brief interest, it wasn’t enough to offset declining price growth across regions. The Northeast and Midwest remained stronger due to relative affordability and limited inventory. This marks the fifth month of slowing price gains, with forecasts indicating further cooling to 2.3% growth by next August.

Source: CoreLogic (November 2024)

Skylar Olsen of Zillow comments on the housing price data: “As we near the slower fall months, many buyers are likely to face affordability concerns amid steep pricing, but sellers should continue to expect record high home equity, especially in the northern and southwestern swaths of the U.S. Home appreciation as measured by Zillow Home Value Index (ZHVI), saw a similar annual slow down in August. Zillow’s September numbers continue the trend of softer annual appreciation and accelerating monthly growth.”

Hannah Jones of Realtor.com highlights some key housing data from the past few weeks, reporting that:

• The median listing price fell by 0.7% year over year, marking the 23rd consecutive week with prices at or below last year’s levels.
• New listings increased by 4.6% compared to a year ago, showing seller activity despite high mortgage rates.
• Active inventory is up 26.6% year-over-year, continuing a year-long trend of rising listings, though growth is slowing.
• Homes are staying on the market eight days longer than a year ago as buyers await better affordability.

Sentiment

Fannie Mae released its Home Purchase Sentiment Index (HPSI), which rose to 74.6 in October, marking its highest point since early 2022 and reflecting a notable rebound in consumer confidence. While more consumers consider it a good time to buy a home, affordability concerns dampen optimism. Expectations remain mixed, with hopes for lower mortgage rates and steady home prices, alongside a growing interest in renting due to high home costs. Some key points include:

• Good/Bad Time to Buy: 20% of respondents say it’s a good time to buy, up 1 point; 80% say it’s a bad time, leading to a net increase of 2 percentage points.
• Good/Bad Time to Sell: 64% consider it a good time to sell, down 1 point, while 35% see it as a bad time, resulting in a net decrease of 1 percentage point.
• Home Price Expectations: 39% expect prices to rise, 23% expect a drop, with the remaining 38% anticipating stability, leading to a net 1-point increase in price optimism.
• Mortgage Rate Expectations: 39% expect rates to fall, a survey high; only 22% anticipate an increase, reflecting a slight uptick in rate optimism.

Joel Berner of Realtor.com comments on this sentiment reporting, highlighting that:

“One of the more notable trends in the Home Purchase Sentiment Index over the past several months has been the respondents’ preferences between renting and buying their next home. The share of respondents who say they would rent a home if they were going to move increased to 36%, a new high-water mark for the HPSI, while the share who say they would buy their next home fell to 63%. Given the fact that nationwide rents have been falling year-over-year for 14 consecutive months and the cost of buying a home continues to rise, this is not much of a surprise.”

On the multifamily side, Eric Lynch of the National Association of Home Builders (NAHB) reports that confidence showed mixed results in Q3 2024, with the Multifamily Production Index (MPI) rising to 40. Still, the Multifamily Occupancy Index (MOI) dropped to 75. Despite strong demand and high occupancy rates, new multifamily construction faces challenges from rising costs, limited financing, and regulatory hurdles. The NAHB expects multifamily construction to stay weak until late 2025 as the market absorbs a backlog of units under construction.

Source: NAHB (November 2024)

Improved sentiment could be partly why commercial and multifamily mortgage loan originations surged in Q3 2024, rising 59% year-over-year and 44% from the previous quarter, according to the Mortgage Bankers Association (MBA). Healthcare properties led growth with a 510% annual increase, followed by substantial gains across hotel, retail, industrial, and multifamily sectors, though office property originations declined by 3%. Among investor types, commercial mortgage-backed securities (CMBS) saw the most significant increase at 260% year-over-year, with substantial rises in depository, investor-driven lender, life insurance, and GSE loan volumes.

Jamie Woodwell, MBA’s Head of Commercial Real Estate Research, notes: “After a slow start to the year, borrowing and lending backed by commercial real estate properties picked up during the third quarter…Lower interest rates were a key driver of the increase, with the yield on the Ten-year Treasury bond dropping during the quarter from an average of 4.31 percent in June to 3.72 percent in September. Long-term rates have increased more recently, which could slow last quarter’s momentum.”