Trump Turns His Attention To Home Affordability: Mortgage Rates Drop

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Trump Targets Housing Prices and Mortgage Rates

Trump spent much of the week posting about housing affordability, starting with calling out large investors buying single-family homes and the impact that’s had on prices. There was no actual policy attached to any of it, no proposal, and no indication of how any restriction would be implemented, but it did change how investors are thinking about the risk of continuing to invest in single family homes. Major institutions like Blackstone saw a significant decline in stock price following the post.

That shift was reinforced when Trump directed Fannie Mae and Freddie Mac via another post on Truth Social to purchase up to $200 billion in mortgage-backed securities using their cash reserves. The move is small relative to past Fed interventions and unlikely to create lasting relief on its own, but it matters symbolically. Government-backed demand for mortgage bonds is one of the few tools that can directly pressure mortgage rates lower, even if the impact is temporary. By buying bonds, the government is decreasing supply and increasing demand. That effect lowers mortgage rates. Again, no comprehensive plan, no execution roadmap, but the pressure exerted drove rates lower (at least in the short term).

JOBS JOBS JOBS

The labor market continued to show signs of struggle after last week's jobs data reports

U.S. job openings fell more than expected in November, dropping to roughly 7.1 million (vs 7.6M expected 😱). The data reinforces the idea that labor demand is cooling, even if it’s doing so unevenly and without a sharp rise in layoffs. 

ADP data showed that private-sector hiring slowed again in December, with employers adding just 41,000 jobs (vs 48,000 expected).

Finally, the December Jobs Report on Friday showed employers added just 50,000 jobs in December, capping a year of weak hiring and coming in below expectations. The unemployment rate stayed steady at 4.6%. But importantly, November job gains were revised lower to 56,000 from 64,000, reinforcing the view that labor market momentum has been overstated.

All of the data shows that we're seeing a cooling jobs market that’s softening gradually rather than breaking, keeping downward pressure on rates intact