Shares of homebuilders and housing providers jumped Wednesday following the midterm elections.
Lennar (LEN) was up more than 8%, and DR Horton (DHI) and PulteGroup (PHM) were also up about 8% at midday.
Housing providers have also benefited from the wave. Home Depot (HD) soared more than 17% before paring its gains to 5%. Lowe’s (LOW) jumped 15% and is now up 7%.
The 10-year Treasury yield (^TNX), the benchmark for mortgage rates, fell slightly.
The Democratic victory in Congress fuels anticipation of further action in Washington on housing affordability, an important issue in the midterm campaign, and the possibility of lower mortgage rates in a changing macroeconomic environment.
The real estate market is mired in an unyielding rut, hobbled by high housing prices and high mortgage rates. Home buyers, especially younger first-time buyers, are struggling to break into the market.
Learn more: How to get the lowest mortgage rates now
Despite the impasse, Congress this year passed the first major housing bill in decades, a sprawling bill that addresses housing affordability by encouraging more housing construction, expanding financing options, providing grants to local governments to ease zoning restrictions and increase housing supply, and streamlining environmental review processes, among other provisions.
As Democrats take power and promise to address Americans’ concerns about the cost of living, more legislative action could come to fruition, particularly on the demand side.
TD Cowen wrote in a post-election memo that Rep. Maxine Waters of California, who could become chairwoman of the House Financial Services Committee, plans to focus on housing, including down payment assistance and funds to renovate public housing. Analysts added, however, that they “remain doubtful whether this law will become law.”
UBS analysts cited additional subsidies for affordable housing and tax benefits for first-time buyers and multifamily housing developers as potential areas for Congressional action.
Molly Moorhead is a business editor for Yahoo Finance.
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