Home Depot Inc. (HD) is having a standout Friday, rallying as Wall Street connects the dots between a new White House housing proposal and what it could mean for paint, power tools, and kitchen cabinets.
The catalyst? President Donald Trump's plan to deploy roughly $200 billion in cash reserves held by Fannie Mae and Freddie Mac to buy mortgage-backed securities. The goal is straightforward: drive mortgage rates below 6% and shake loose the housing market's current paralysis.
Breaking the Lock-In Effect
Here's the problem the plan is trying to solve. Millions of homeowners are sitting on mortgages with rates in the 3% to 4% range, locked in during the pandemic-era borrowing bonanza. Moving now would mean trading up to a 7% mortgage, which makes staying put the financially rational choice even if your house no longer fits your needs.
Lower rates would change that calculus. More sellers would list. More buyers would pull the trigger. And all those transactions would trigger the kind of spending that keeps Home Depot busy: move-in renovations, fresh paint, new appliances, upgraded landscaping.
Favoring Individual Buyers Over Institutions
Trump also doubled down on his support for policies that would restrict large institutional investors from snapping up single-family homes. That shift could tilt the market back toward first-time and move-up buyers, the kind of homeowners who historically open their wallets wide in the first few years of ownership.
DIY projects, appliances, yard improvements—these are the bread and butter of Home Depot's ticket growth, and individual homeowners tend to spend more consistently in those categories than institutional landlords managing rental portfolios.