Mortgage rates spiked following President-elect Donald Trumpโs win, causing notable declines in housing stocks, CNBC reports.
The 30-year fixed mortgage rate rose by 9 basis points to 7.13%, according to Mortgage News Daily, reaching its highest level since July.
Matthew Graham, COO of Mortgage News Daily, noted that the rise aligned with expectations: “The expectation among bond traders coming into the election was that rates would move higher in the event of a Trump victory and especially a red sweep.”
Housing stocks dropped over 4% in response, which John Burns, CEO of John Burns Real Estate Consulting, explained was a natural reaction.
โThe builder stocks are highly sensitive to mortgage rates and mortgage rate expectations,โ he said, noting that inflation expectations are also pushing long-term rates up.
The National Association of Home Builders (NAHB) expressed optimism in a statement from chairman Carl Harris, saying they look forward to working with Trumpโs administration on a โpro-housing legislative and regulatory agenda.โ
Although Trumpโs campaign did not include a detailed housing plan, he mentioned deregulation and potentially using federal land for construction, which could affect the market going forward.
As mortgage rates continue to climb from their recent low of 6.11% in September, the impact on monthly payments is substantial.
For a $400,000 home purchase with a 20% down payment, the monthly payment on a 30-year fixed mortgage has risen by $216 since early September, Mortgage News Daily reports.
Despite rising rates, home sales surged in early fall, largely driven by an increase in supply.
Realtor.com data shows 29.2% more homes on the market in October compared to last year, reaching inventory levels not seen since December 2019.
Mr Graham said that the path forward remains uncertain and will depend on factors like inflation and economic conditions.
“The path ahead is anyoneโs guess.”