Scott Bessent tried to warn him. Or at least I assume (and hope) Scott Bessent tried to warn him.
“Him” is Donald Trump, a US president so determined to get a handle on housing affordability in America that he resorted to a series of gimmicks in recent months including banning institutional investors from the single-family market and demanding the GSEs buy $200 billion in MBS.
I can’t speak to the effectiveness of those gambits (other than to say they aren’t working so far), but by late February, mortgage rates were at least lower than they were a year ago, when Trump and Bessent first made explicit their intention to pull out all the stops in pursuit of lower 10-year yields (and I’ll pretend the tariffs didn’t work at cross purposes with that pledge).
Alas, the war and the accompanying spike in energy prices have erased about a fourth of the progress Trump made on home financing costs. The 30-year fixed rose to 6.30% in the MBA’s weekly update, up 21bps from the local lows.
The purchase gauge actually rose to a multi-week high (I’d argue that’s a catch-up effect given that purchase apps decoupled last month), but the rate uptick snuffed out refis, which plunged 19% from the prior week.
“Mortgage rates continued to move higher, driven by increasing Treasury yields as the conflict in the Mideast kept oil prices elevated, along with the risk of a broader inflationary shock,” MBA VP Joel Kan sighed, in the editorial accompanying Wednesday’s update.
Earlier this month, Redfin commissioned a survey to determine whether the war was impacting Americans’ purchasing plans.
As the figure above shows, just a quarter said they were delaying or canceling a major purchase because of the conflict.
“The military conflict with Iran… could push mortgage rates up [and] may also impact the housing market by exacerbating economic uncertainty, but as of the first week of March, most Americans were undeterred in plans to buy something costly like a home or car,” Dana Anderson remarked.
I wonder if the picture looks any different now, two weeks later, with mortgage rates up 20bps and gas prices higher by 25%.
All signs point to the next move being renovating and redecorating HUD headquarters and possibly entertaining a name change for the agency. And maybe Netanyahu can tell us what to do – he’s got a demonstrable track record of expanding housing at low or no cost.
DUH would bring it in line with the rest of this administration.
+1.
Unfortunately “urban” has become an acceptable perjorative for a lot of racists scared off other words (see also “thug”). This Administration has shown zero interest in traditional urban development – quite the opposite. So I suggest we go with with HUDD – Housing and Urban Disruption and Death.
I just read this earlier today: America’s wealthiest 20% hold 56.4% of $48 trillion in real estate, while the bottom 20% own just 5.1%. The top 1% alone match the bottom 40%.
Going to take more than forbidding institutional buyers and demanding GSE’s buy MBS to even make a dent in this situation!