The election of Donald Trump as president-elect has had a significant impact on the U.S. financial markets. The 10-year Treasury yield has risen, leading to an increase in mortgage rates. The average rate on the 30-year fixed mortgage surged to 7.13%, the highest since July 1 of this year.
The rise in mortgage rates has had a ripple effect on the housing market. Housing stocks, including major public builders and building material companies, have fallen sharply in response to the higher rates. Retailers like Home Depot and Lowe’s have also seen their stock prices decline. The higher rates are expected to impact the affordability of homes, with a $400,000 home now costing $216 more per month for a 30-year fixed mortgage.
Despite the rise in mortgage rates, the housing market has seen an unusual surge in sales this fall. Pending sales, which represent signed contracts, rose 7% in September compared to August. This is largely due to an increase in the supply of homes actively for sale, which reached the highest level since December 2019. However, the path ahead for the housing market remains uncertain and will depend on factors such as inflation, the economy, and Treasury issuance.
