The US housing market, after three years of sluggish transactions, may be poised for a turnaround. A recent Goldman Sachs study indicates that a series of policy measures rolled out by the Trump administration are attempting to break the market deadlock. Among these, a $200 billion mortgage-backed securities (MBS) purchase plan has already driven mortgage rates down by 15 basis points, injecting vitality into the upcoming spring homebuying season.
The Trump administration is taking multiple steps to address the housing market's difficulties, a sector long plagued by high mortgage rates and home prices, which have driven housing affordability to its lowest level in decades. The policy toolkit includes the large-scale MBS purchase plan, a proposed ban on purchases by institutional investors, and other measures designed to reduce the cost of homeownership.
Goldman Sachs analyst Arun Manohar pointed out in a research report released last Wednesday that these policies have already had a tangible impact on the market. Since June of last year, mortgage rates have cumulatively fallen by approximately 80 basis points, with existing home sales in 2026 expected to be at least 5-7% higher than in 2025.
However, analysts also warn that if the $200 billion purchase plan is merely a one-off operation without subsequent supportive measures, MBS spreads could widen before the end of the year, potentially reversing the downward trend in mortgage rates.
The MBS purchase plan has driven rates to a three-year low. On January 8th, Trump announced on social media that he had directed relevant departments to purchase $200 billion in mortgage bonds. Subsequently, Director Pulte and Treasury Secretary Besson confirmed that the purchase plan would be executed by government-sponsored enterprises Fannie Mae and Freddie Mac.
Despite limited project details, the agency MBS market quickly digested this positive news. Current coupon spreads have narrowed by about 14-15 basis points, with mortgage rates falling in tandem, now approaching their lowest levels since September 2022. Goldman Sachs believes this degree of spread compression is consistent with the plan's scale, suggesting the market has fully priced it in.
Goldman Sachs notes that the cumulative drop of about 80 basis points in mortgage rates since June 2025 will improve housing affordability and boost market sentiment ahead of the spring buying season. Analysts estimate this decline could lead to existing home sales in 2026 being at least 5-7% higher than in 2025.
The Trump administration may also push the new Federal Reserve leadership to provide additional support by reinvesting monthly maturing funds from the Fed's portfolio into MBS. But Goldman warns that if the $200 billion purchase is a one-time operation, and there are no other MBS purchase plans from the GSEs, the Fed, or the Treasury, MBS spreads could widen from current levels by year-end. Agency MBS nominal spreads have already tightened relative to long-term averages, and option-adjusted spreads (OAS) are at levels seen during the Fed's quantitative easing purchase programs.
The impact of the institutional investor purchase ban is limited. Another major housing policy announced last week was Trump's plan to prohibit institutional investors from purchasing single-family homes. This policy aims to reduce institutional competition, thereby increasing supply and lowering prices for individual homebuyers.
Goldman Sachs believes the nationwide impact of this policy is quite limited. Industry estimates show that properties owned by institutional investors account for less than 0.5% of the total housing stock and about 2-3% of the rental housing stock. Cotality data indicates that institutions owning more than 100 properties account for about 5% of recent home purchase activity. The rental housing market is predominantly led by small investors, who own approximately 79% of rental units.
The policy's impact might be slightly more pronounced in Sun Belt metropolitan areas where institutional investors have a stronger presence. As existing home prices have surged in recent years, large single-family rental (SFR) operators have shifted towards a build-to-rent model to better control unit economics, rather than purchasing homes from the MLS. These homebuilding operations provide much-needed supply, and Goldman Sachs believes they would not be included in a potential institutional purchase ban. Build-to-rent construction has averaged about 15,000 units per quarter over the past year.
In an interview last week at the Minnesota Economic Club, Secretary Besson stated that the institutional SFR ban would not be applied retroactively. While the actual legislative language requiring Congressional approval is still awaited, the administration appears to accept that institutional SFR operators would retain the properties they already own. This removes a major potential downside risk for the housing market.