P
resident-elect Donald Trump's victory has led to a surge in the US 10-year Treasury yield, causing mortgage rates to climb. The average rate on the 30-year fixed mortgage jumped 9 basis points to 7.13% on April 26, according to Mortgage News Daily, its highest level since July 1 of this year.

    Housing stocks have reacted negatively, with major builders like Lennar, D.R. Horton, and PulteGroup falling over 4% in midday trading. Retailers Home Depot and Lowe's also declined by more than 3%. The builder stocks are highly sensitive to mortgage rates and inflation expectations, said John Burns, CEO of John Burns Real Estate Consulting.

    While Trump didn't outline a detailed housing plan, he spoke about deregulation and opening federal land for more home construction. The National Association of Home Builders congratulated the president-elect, expressing hope for a pro-housing agenda that increases supply and eases affordability woes.

    Big builders have been absorbing higher mortgage rates by buying down rates for customers, but this has cut into their margins. Mortgage rates hit a recent low of 6.11% on September 11, but have risen steadily since, despite the Federal Reserve's rate cut. Stronger-than-expected economic reports in September and October contributed to the increase.

    For consumers, higher mortgage rates mean higher monthly payments. A homebuyer purchasing a $400,000 home with a 20% down payment would see their monthly payment rise from $1,941 in early September to $2,157 today, a difference of $216.

    The surge in existing home sales this fall is partly due to increased supply. There were 29.2% more homes actively for sale in October compared to the same month last year, reaching its highest level since December 2019, according to Realtor.com. However, the path ahead remains uncertain and will depend on inflation, economic growth, and Treasury issuance.