Fannie Mae and Freddie Mac have seen their stock prices fall approximately 70% over the past six months, reaching their lowest levels in over a year. This decline reflects investor skepticism toward the Trump administration's efforts to sell more shares of the two mortgage finance giants to the public. A significant downturn began in mid-September, shortly after earlier optimism about a potential public offering for the institutions in 2025 failed to materialize.

Preferred shares, primarily held by long-term institutional investors, have also experienced declines. Freddie Mac's perpetual preferred stock dropped about 23% over the past month, bringing its price close to levels seen just after Trump's election victory.

The Federal Housing Finance Agency (FHFA), which regulates Fannie Mae and Freddie Mac, did not immediately respond to requests for comment. BTIG analyst Eric Hagen stated that due to declining transparency regarding the companies' plans, the two entities are facing a "complete breakdown." Furthermore, their stock prices tend to fall when the 10-year Treasury yield, a benchmark for borrowing costs, rises. As seen on Wednesday, yields climbed after Federal Reserve Chair Jerome Powell spoke following the central bank's decision to hold interest rates steady.

Hagen noted via email, "These stocks have effectively become more negatively correlated with rates, largely because the market interprets that Trump might offset the impact of higher rates by exerting greater control over the companies." Fannie Mae and Freddie Mac have been under government conservatorship since the global financial crisis.

In August of last year, reports that the White House was planning an IPO—potentially valuing the enterprises at around $500 billion or more and involving the sale of a 5% to 15% stake to raise roughly $30 billion—caused their stock prices to surge. However, few concrete details have emerged since, and government attention appears to have shifted to other priorities, such as the conflict involving Iran.

Rising mortgage rates could also make housing affordability a primary concern, potentially leading officials to proceed cautiously with any stock sale plan, as market doubts about government support might push mortgage rates higher.

Evercore ISI analyst Matthew Axe commented, "Without a decision on the next steps for the government-sponsored enterprises (GSEs), the near-term outlook is unclear. But there is still ample time in this administration's term for the GSEs to become a priority again." Last week, Wedbush analyst Henry Coffey suggested that a stock offering for the two mortgage financiers is unlikely to commence until after the U.S. midterm elections in November. Given that Trump is "clearly focused on other matters," Coffey expects any administration statement on Fannie Mae and Freddie Mac to emphasize "reducing mortgage costs for residential borrowers." He also lowered his price targets for both companies' common shares.

Economist and investor Peter Schiff raised further doubts on Tuesday. In a post on platform X, he wrote, "True privatization is impossible. Any misguided move to privatize profits while socializing losses would raise mortgage rates and lower home prices." He concluded, "Trump will not follow through."

Earlier this week, Oksenholt Capital Management disclosed it had "taken profits on part of our Fannie Mae common stock position" but added that "we remain bullish on both enterprises and their junior preferred shares." The firm stated on Monday that Oksenholt and its affiliated investment vehicles are among the largest holders of Freddie Mac common stock.

The specific trigger for the common shares' drop of over 20% this week is not entirely clear. Evercore analyst Axe suggested one potential catalyst was the lack of a detailed plan for a public share sale in a strategic report released by the FHFA. If that was the cause, investors may have overreacted, as the document was not intended as a venue for major policy updates.

Last week, Trump signed executive orders aimed at improving housing affordability, part of an effort to ease cost-of-living pressures amid market volatility driven by the Iran conflict and rising oil prices. The orders did not mention an IPO or any other plans to release Fannie Mae and Freddie Mac from government control.