By Scott Carpenter | Bloomberg

The Trump administration’s cuts to Fannie Mae and Freddie Mac, the government-sponsored mortgage giants, may put a damper on the housing market as it becomes harder to obtain some types of home loans, according to a report from Bloomberg Intelligence.

Credit availability for Fannie and Freddie mortgages has reached a record low this year, according to an index for credit availability from the Mortgage Bankers Association.

That long-term trend could be exacerbated by recent changes put in place by the Trump administration, which are leading to fewer product offerings, staffing cuts and tighter lending standards at the government sponsored enterprises, Bloomberg Intelligence strategists Erica Adelberg and Viktoriia Adamova wrote in a May 15 note.

In recent years, rising home prices have made it harder for poorer and middle-class borrowers to meet the income criteria needed for their mortgages to qualify for Fannie or Freddie underwriting.

In response, the GSEs rolled out new affordability programs designed to expand access for these borrowers, such as the HomeReady and HomePossible programs, which offer low down payment options. Last year, Fannie Mae also created its social bonds program, designed to incentivize more lending to underserved communities like those in rural or designated disaster areas.

Some of these programs are now in the crosshairs of the Trump administration and Bill Pulte, the new head of the Federal Housing Finance Agency. In March, Pulte ordered Fannie and Freddie to halt programs designed to support first-time homebuyers by providing assistance for down payments and closing costs for some economically or socially disadvantaged groups.

A spokesperson for FHFA said: “Contrary to this media report, Fannie and Freddie have great robust affordability programs, and our actions are reducing the housing and mortgage costs which skyrocketed under Biden’s four-year inflationary economy.”

New apartments across US at 50-year high

More new apartments were built in 2024 than in any other year since 1974, but the Trump administration’s tariffs and deportations of potential construction workers, plus higher interest rates, could be a wet blanket on the boom.

A U.S. Census Bureau survey found almost 592,000 new apartments were finished last year, the most since the 1970s, when baby boomers sparked a construction surge as they moved out of their childhood homes. There were 693,000 new apartments built in 1974, when the country had about half as many households.

But there has been a steep slowdown in construction starts, as the newly completed apartments come online. The increased supply has lowered rents and increased vacancy rates, making new development less profitable. Some experts also say tariffs on construction materials and labor shortages caused by dips in immigration will create headwinds for new construction.

Apartment starts were down 27% in 2024 compared with 2023, and down 37% from a recent peak of 531,000 in 2022, despite the historic rate of completions. Apartment starts were at their lowest ebb since 2013.

Housing experts have long lamented that there aren’t enough apartments and single-family houses in the U.S. — at least not in places where people want to live and at prices they can afford.

The massive jump in apartment construction has its roots in 2021 and 2022, when interest rates were low and rent growth was high, said Rob Warnock, senior research associate for Apartment List, a company that posts rental listings online.

“Those new apartments came online in 2023 and 2024, and while those deliveries are slowing down today, there are still many apartments in the pipeline,” said Warnock, who added that “supply and demand are coming back into balance.”

Estimates of the national housing shortage last year varied widely, from 1.5 million houses and apartments to 20.1 million; since then, another 1.6 million houses and apartments have been built. Most experts estimate a shortage of 1.5 million to 5.5 million, according to the Joint Center for Housing Studies of Harvard University.

Though completions aren’t tracked by state, permits that lead to new apartments have been granted at high rates in recent years in South Dakota, Utah, Arizona and Colorado. Rates are lowest in Mississippi, Wyoming, West Virginia, Rhode Island, Oklahoma and Alaska.

—Tim Henderson, Stateline.org

Homebuilder sentiment slides to 2023’s dip

Confidence among US homebuilders slumped in May to the lowest level since late 2023, as tariffs made it harder to price homes and anxious consumers dragged their feet on purchases.

An index of overall market conditions from the National Association of Home Builders and Wells Fargo slipped 6 points to 34 this month. That trailed all estimates in a Bloomberg survey of economists.

All three components that make up the index fell, with a measure of expected sales in the next six months sliding to an 18-month low. A gauge of present sales dropped to the lowest since late 2022, while traffic of prospective buyers was the weakest in 1 1/2 years.

“The spring home buying season has gotten off to a slow start as persistent elevated interest rates, policy uncertainty and building material cost factors hurt builder sentiment in May,” NAHB Chairman Buddy Hughes, a builder and developer from Lexington, North Carolina, said in a statement.

Builders face a host of challenges that include stubbornly high mortgage rates, faltering consumer confidence and government policy that risk further restraining housing demand. Builder sentiment fell in all four US regions in May.

President Donald Trump, who has pledged to remove burdensome regulations, has also imposed tariffs that the NAHB estimates could boost construction costs by $10,900 a home. However, a recent trade agreement with the UK and a reduction in tariffs with China are “a welcome development,” NAHB Chief Economist Robert Dietz said in a statement.

Nearly 80% of builders reported having difficulty pricing homes because of uncertainty around materials costs, Dietz said.

In May, 34% of builders reported cutting prices, the largest share since December 2023, NAHB said. The share of builders reporting using sales incentives was unchanged at 61%.

— Michael Sasso, Bloomberg