US home builders briefly jumped more than 5% yesterday on a report about "Trump homes" before giving most of it back when the White House said the plan wasn't under consideration.
The whole saga is a bit bizarre, and even the denial isn't being taken at face value as the market senses that the administration is under pressure to do something about housing affordability, particularly with long-end rates flattened out and unlikely to be helped by Fed rate cuts. With Warsh as Fed chair, the possibility of QE is also remote.
The report citing people familiar came from home builders and was described as this:
Under one iteration of the plan, the investors would rent out the homes to tenants, whose monthly payments would, after three years, be counted toward a down payment if they wished to purchase the home.
It's a creative idea but the same report said the White House wasn't considering it. Another idea that was previously floated was allowing Americans to tap 401K retirement plans for down payments.
I think this is an area worth following closely because it's at the nexus of consumer sentiment, demographics and spending.
The method here seems to be throwing ideas at the White House until one sticks. You have to imagine that works at some point and leads to a burst in home-building activity.
File that under: Upside risks to the economy.
For now, there's a big bifurcation among home builders that reflects the k-shaped economy theme. Those catering towards higher-income buyers are doing fine while those catering to the middle class and below are struggling to find markets. I should also note that there are other signs of life in the housing market with Florida for-sale housing inventory now 0.5% lower than a year ago.
