Realtors, mortgage lenders, and other industry professionals: if three years of depressed transaction activity have you thinking about exiting, it may be worth holding that thought for now. A new Goldman note suggests that policy maneuvering by the Trump administration could partially unfreeze the housing market in the upcoming selling season, potentially reviving some activity.
The Trump administration is attempting to unfreeze a housing market paralyzed by elevated mortgage rates and high home prices, which have pushed affordability to generational lows.
Goldman analyst Arun Manohar penned a note on Wednesday asking clients: All hands on deck to fix US housing affordability?
Manohar highlighted several key housing policies under the Trump administration: a recently announced $200 billion MBS purchase program aimed at lowering mortgage rates, a proposed ban on institutional investors buying single-family homes, and additional measures designed to reduce the cost of homeownership.
Here’s the note:
Affordability, particularly in the context of housing, has recently been a central focus for the Trump administration. In a national televised address delivered in December, the President announced forthcoming plans which he described as “the most aggressive housing reform plans in American history.” According to media reports, President Trump is expected to introduce several initiatives aimed at enhancing housing affordability during his upcoming speech at the World Economic Forum in Davos. To date, two policies have been previewed, each of which has already had market moving impacts. In today’s Global Markets Daily, we discuss the impact of recently introduced policies and outline additional measures that may be under consideration.
GSE MBS purchase program has already pushed mortgage rates lower by 15bp
On January 8th, President Trump posted on social media that he has instructed his representatives to buy $200 billion of mortgage bonds. Subsequently, Director Pulte and Secretary Bessent have essentially confirmed that the buying is being carried out by the government sponsored enterprises (GSEs) – Fannie and Freddie. Although very limited details about the program are available so far, the agency MBS market has quickly priced in the program with production coupon spreads tightening around 14-15bp so far. We believe the spread tightening so far is consistent with a program of this magnitude and hence believe that it is fully priced-in. Mortgage rates have also declined in tandem and are now close to the lowest levels since September 2022 (Exhibit 1). This should improve affordability and improve sentiment in the housing market ahead of the key spring homebuying season. We believe that the cumulative decline of around 80bp in mortgage rates since June 2025 could boost existing home sales by at least 5-7% in 2026 vs. 2025. Moreover, it is possible that the administration could push new Fed leadership to provide additional support to housing by reinvesting monthly run-offs from the Fed’s portfolio back into MBS. However, as we noted recently, if the $200 billion purchase program is a one-off, and there are no other MBS purchase programs from the GSEs/Fed/Treasury, then MBS spreads are likely to end the year wider vs. current levels. Agency MBS nominal spreads are already tighter vs. their longer-term average, and OASs are at levels last observed during the Fed’s QE purchase program (Exhibit 2). Therefore, the key risk for the housing market is that the decline in mortgage rates over the past two days reverses by the end of the year.
Proposed ban on institutional investors from purchasing single family homes
The other major housing policy announcement from last week was President Trump’s intention to ban institutional investors from buying single-family homes. While the goal of this policy is to reduce competition from institutions and increase supply/reduce prices for individuals, we believe the national impact will be quite small. In aggregate, industry estimates show that institutional investors own less than 0.5% of total housing stock and around 2-3% of rental housing stock (Exhibit 3). Estimates from Cotality show that institutions owning 100+ units account for about 5% of recent home purchase activity. The rental housing market is largely dominated by smaller investors, who own around 79% of the total rental units. The impact could be slightly larger in some of the sunbelt metros where institutional investors have a greater presence. As prices of existing homes have soared in recent years, large single-family rental (SFR) operators have shifted towards built-to-rent homes, where they have better control over unit economics, rather than buying homes from MLS. These homebuilding operations provide much-needed supply, and we believe will not be included in any potential institutional purchase ban. Built-to-rent home volumes have averaged approximately 15k per quarter over the past year. Finally, Secretary Bessent spoke about the institutional SFR ban during an interview at the Economic Club of Minnesota last week and his comments suggest that the institutional SFR ban would not apply retroactively. While we need to see the actual language when and if Congress approves the legislation, it appears the administration would be comfortable with institutional SFR operators retaining the properties they already own. This removes a major headwind to the housing market.
Related:
Whether the Trump administration can solve the U.S. housing affordability crisis, which largely emerged during the Bidenomics era, remains an open question. Lower mortgage rates would clearly provide a tailwind as the selling season typically begins in late February or early March, when buyers reemerge after winter, weather conditions improve, and house-hunting activity accelerates. As for the 50-year mortgage rate idea, that Trump administration proposal appears to have been shelved for now.
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