How Trump policies are colliding with housing market
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Housing starts dipped to their lowest level since early in the pandemic, but homebuilder stocks jumped Friday on signals that the White House may be offering carrots to coax builders into action.
Why it matters: The housing market has been mired in a slump after years of price increases and rising mortgage rates, which has helped cool demand and drive builders to the sidelines.
Driving the news: The annualized rate of new homes breaking ground was 1.246 million in October, down 4.6% from September and down 7.8% from a year earlier, according to a Census Bureau report out Friday.
- That's the lowest level since May 2020.
Homebuilder stocks jumped, however, with Lennar (+8.9%), D.R. Horton (+7.8%) and PulteGroup (+7.3%) all closing with sizable gains.
- For that, thank a series of headlines this week.
Zoom in: Commerce chief Howard Lutnick has met with the heads of major U.S. homebuilders in recent weeks, Bloomberg reported Friday, with one person familiar saying incentives were discussed to spur construction.
- This week President Trump has called for multiple actions aimed at improving home affordability: Thursday, he said that the government would buy $200 billion in mortgage bonds, a move that drove down mortgage rates Friday.
- Wednesday Trump said he would take steps to ban large institutional investors from buying more single-family homes, which critics argue has driven up prices on homes and rent.
State of play: Friday's housing starts report shows that builders, as of the fall, were still waiting for conditions to improve.
- October's decline was attributable to plunging construction of new multi-family dwellings.
- Annualized single-family housing starts rose 5.4% from September, although they remained near the lowest levels of the past two years, Bloomberg noted.
Between the lines: Housing starts continued to weaken in the delayed September–October report, but rising permit issuance in September hint construction may be nearing a bottom, wrote Capital Economics North America economist Thomas Ryan.
- Still, "homebuilders remain cautious about starting new projects despite still-solid demand for new builds, as they work their way through large amounts of existing unsold inventory," Ryan added.
The big picture: Trump's economic interventionism is colliding with the housing market.
