Nyse Order Imbalance 9174.0 Shares On Sell Side

By Shaina Mishkin

Housing industry's stocks were headed higher after President Donald Trump's speech in Davos delivered few surprises in terms of housing policy.

The Davos address was awaited by investors. The president posted on social media earlier this month that he would discuss his proposed ban on institutional investors buying single-family homes, along with "further Housing and Affordability proposals" at the World Economic Forum.

But the speech was most memorable for what it didn't include. Those bracing for a government move to target builders, whether by preventing stock buybacks or taking other measures to encourage the companies to build more homes than they would otherwise, were relieved.

The iShares U.S. Home Construction exchange-traded fund was up 2.2% in afternoon trading, snapping a two-day losing streak and on pace for its largest increase since Jan. 9, according to Dow Jones Market Data. Shares of D.R. Horton, the nation's largest public home builder, were up 2.8%. Lennar and PulteGroup, two other large builders, were up 2.4% and 1.9%, respectively.

The contents of the president's housing market comments largely centered on measures to restrict purchases of single-family homes by big institutional investors and other already-announced goals, such as a cap on credit-card fees. Trump also assured homeowners that the government doesn't want to make homes more affordable by tanking home prices, Barron's previously reported .

"There really wasn't anything that we didn't already know" in the Davos address, Ivy Zelman, executive vice president of a Walker & Dunlop housing research firm, said on a Wednesday webinar.

"We thought there was going to be this big program announced to really drive more new construction to the housing market," she added. "I'm not sure that still won't happen, but it didn't get announced today."

The housing policy pendulum has swung from favoring actions to reduce housing costs by spurring supply to those favoring demand, says Rick Palacios, Jr., the director of research at John Burns Research and Consulting.

Too much buyer demand without enough supply risks driving home prices higher. But right now "there's enough slack in the market" to tolerate more home-buyers, Palacios says.

"Over the more medium, long term, you do need to have some mechanisms, some levers, to push and pull that will allow more supply to come into the system," he says. "Right now the focus on is on: How can we get demand going again?"

Write to Shaina Mishkin at shaina.mishkin@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

Opendoor Technology, Inc. CEO Kaz Nejatian lauded U.S. President Donald Trump's move to bar institutional investors from accumulating single-family homes in an effort to make housing more affordable for consumers. The company’s stock dipped amid a broader selloff on Tuesday but is still up nearly 8% for the year.

Trump's Housing Order

"To preserve the supply of single-family homes for American families and increase the paths to homeownership, it is the policy of my Administration that large institutional investors should not buy single-family homes that could otherwise be purchased by families," Trump said on Tuesday. 

He signed an executive order directing state agencies to promote home sales to individual buyers, restrict federal programs from facilitating the sale of single-family homes to Wall Street investors, and review acquisitions by large investors. 

OPEN Piggy Bags

“When people think of the American dream, they think of affordability and homeownership. President Trump’s action today is a massive step in the right direction on both of those fronts,” Nejatian said in an X post. “I support them unequivocally.”

Marketing his company strategically, Nejatian added that OPEN is the number one stock by trading volume since last year and among the most broadly held in America. That’s amid broadly weak performance for the stock over the last few months, notwithstanding a 6% jump on Friday after SRx Health Solutions purchased a block of OPEN stock.

Housing Stocks In Focus

OPEN shares as well as those of homebuilders such as Lennar Corp, D.R. Horton, and PulteGroup, Inc., received support in the past weeks, as the U.S. mortgage rates fell below 6% for the first time in years amid Trump’s directive for Fannie Mae and Freddie Mac to buy $200 billion in mortgage bonds.

Trump's latest executive order is widely viewed as an effort to appease voters frustrated by rising home prices and broad-based cost pressures as the U.S. heads into the November midterm elections. It aligns Trump closely with Democrats, who for years have criticized corporate homebuying, claiming it has helped stoke housing costs.

Besides the home-builders, stocks of Blackstone Inc., Invitation Homes Inc., and American Homes 4 Rent – firms with sizable holdings of single-family homes – will be in focus on Wednesday.