We have mixed thoughts on the near-term impact, but the election may spur increased confidence in some Americans, which could act as a tailwind for housing.
By Brian Bernard, CFA, CPA | 11-09-16 | 09:01 AM | Email Article

Political and economic uncertainties generally act as headwinds for home sales, but in the months leading up to the election, housing data mostly remained quite strong. However, with the election of Donald J. Trump as the 45th president of the United States, we have mixed thoughts on the near-term impact the election may have on housing. We think that the related uncertainty and market volatility could dampen near-term home sales. At the time of this writing, S&P 500 futures have recovered from session lows; however, we think sustained market weakness would no doubt have a negative impact on housing demand. That said, according to the Fannie Mae Home Purchase Sentiment Index survey conducted before the election, more than half of Americans surveyed believe the United States economy is headed in the wrong direction. We see the election results as a strong mandate for change in Washington, and we submit that the election outcome may spur increased confidence in some Americans, which could act as a tailwind for housing. At this time, we are not materially updating our housing forecast, and we will review the longer-term impact the election may have on housing fundamentals as more policy details emerge from the Trump administration.

Brian Bernard, CFA, CPA, is an equity analyst for Morningstar.

We are hopeful that the administration’s economic policy can spur key drivers of housing demand that are sorely needed, such as wage growth and sustained consumer confidence. We will also monitor the administration’s immigration policy, which could negatively impact the supply of construction laborers. Homebuilders are currently facing labor shortages, and we think this shortage could be exacerbated by stricter immigration policy and increased national infrastructure spending that would further increase demand for construction labor.

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Brian Bernard, CFA, CPA does not own shares in any of the securities mentioned above. Find out about Morningstar's editorial policies.
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