Homebuilders Perk Up After Trump’s Election

U.S. homebuilders grew more optimistic about the future in November after Republicans swept the general election.

The National Association of Home Builders (NAHB) said Monday that an index measuring optimism among home builders rose to its highest since April. The NAHB/Wells Fargo National Housing Market Index rose to 46 from 43 in October, though it remains below the level of 50, which indicates builders are generally optimistic about the market. An index measuring the outlook for six months ahead rose to 64, its highest since April 2022, from 57 in October.

Economists said the swell of optimism comes as President-Elect Donald Trump’s decisive victory cleared any election uncertainty. Before Nov. 5, the cloudy outlook for future tax policy may have been causing prospective homebuyers to hold off. The Republican sweep of Congress and the White House made it nearly certain that Trump’s 2017 tax cuts, many provisions of which expire in 2025, would be extended, benefitting high-earning households that might have paid higher taxes under Democrat Kamala Harris.

“This newfound optimism likely reflects hopes that high-income households will move forward with home-buying plans, now that the provisions of the 2017 Tax Cut and Jobs Act look set to be rolled over in full at the end of next year and stock prices have jumped, boosting confidence,” Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics, wrote in a commentary.

The index is based on a survey of builders who were asked to rate current sales, the six-month outlook, and customer traffic.

While the prospect of tax cuts may boost the housing market, some of Trump’s policies could have the opposite effect in the long run. Homebuilders have feared that mass deportations could deplete the construction workforce. Economists have also predicted that Trump’s proposed tariffs could push up inflation, which would, in turn, cause the Federal Reserve to keep interest rates higher for longer, putting upward pressure on mortgage rates.

According to Freddie Mac, the average rate for a 30-year mortgage has risen to 6.78%, up from 6.08% in late September, as financial markets anticipated and reacted to Trump’s victory. High mortgage rates have stifled the housing market in the past few years, as homeowners have been reluctant to sell their houses and abandon low-cost mortgages they secured during the pandemic when rates were at rock bottom.