Mortgage and homebuilding stocks showed robust performance on Friday, spurred by a recent directive from former President Donald Trump to facilitate large-scale purchases of mortgage bonds aimed at reducing housing costs. Homebuilding and mortgage industries emerged as leading sectors, each registering approximately 1.7% gains. The iShares U.S. Home Construction ETF surged nearly 6%, marking its best performance in over a month.
Rocket Companies (RKT) experienced a notable increase of 6.4%, reaching its highest price point since June 2021. This performance indicates solid investor interest, with the stock now standing about 10% above its designated buy point of 20.60 from a cup-with-handle chart pattern. LendingTree (TREE) saw an impressive rise of more than 13%, climbing back above its 50-day moving average. Further bolstering the momentum, Better Home & Finance (BETR) enjoyed an 11% boost despite remaining under its 50-day line, while PennyMac Financial Services (PFSI) hit a new record high with gains exceeding 5%.
Prominent homebuilders such as PulteGroup (PHM), Green Brick Partners (GRBK), and M/I Homes (MHO) all experienced significant upward movement of around 6% in high trading volumes. D.R. Horton (DHI) also found itself on the upswing, reclaiming its 50-day moving average, which could indicate a ripe opportunity for aggressive investors. Several other notable homebuilders, including Taylor Morrison (TMHC), NVR (NVR), Meritage Homes (MTH), Tri Pointe Homes (TPH), and KB Home (KBH), similarly climbed above their 200-day moving averages, hinting at a potential recovery for the sector.
Adding momentum to this sector is Trump’s announcement regarding bond purchases. In a post on his social media platform, he indicated that Fannie Mae and Freddie Mac would utilize $200 billion of their assets for purchasing mortgage bonds—a move aimed at reducing mortgage rates and enhancing affordability in home ownership. According to industry expert Bill Pulte, this action represents the most substantial mortgage bond purchase undertaken by these organizations to date.
This initiative comes in the wake of Trump’s recent actions targeting affordability, including efforts to limit large institutional investors from acquiring single-family homes. While these investors currently only represent a minor portion of U.S. single-family home ownership, their limited presence nonetheless stirs significant concern regarding overall housing affordability.
With current 30-year fixed mortgage rates hovering around 6.16%, the former president’s plan to purchase mortgage-backed securities could prove vital in addressing one of the key pressures on household budgets. Whether these measures will yield their intended results remains to be seen, but the commitment to directly address critical issues in energy, housing, and financing is clearly evident.
