Allen B. West

WINNING: Another economic “Trump Bump!” This time it’s in…

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Anyone who’s checked their 401(k) or IRA balance since the presidential election saw their portfolio benefit from the so-called “Trump Bump.” It’s mainly in anticipation of the policies that Trump promised, mainly in regards to tax and regulatory reforms.

Among those benefitting? The real estate sector, which hardly comes as a surprise given Trump’s background.

According to CNN Money:

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Pulte (PHM), DR Horton (DHI) and Lennar are all up more than 10% in the past two months and are among the top 25 stocks in the S&P 500 since President Trump took office.

Even though mortgage rates could climb if the economy continues to pick up steam (with or without a Trump stimulus package this year) and as the Federal Reserve hikes short-term interest rates, builders are confident more people will be buying homes.

Stuart Miller, the CEO of Lennar (LEN), said in the company’s earnings release this week that there was an “improving macroeconomic environment following last year’s election.”

He pointed to “renewed optimism, wage and job growth, and consumer confidence.” Miller added that “as a result, our homebuilding operations have gone from slow and steady to a faster than expected sales pace throughout our first quarter.”

The hope is that the economy, which already had started to pick up some steam in the past year before Trump’s victory, will continue to gain momentum.

Despite raising rates, an improving economy will boost wages, offsetting the increased cost of owning a home. One month is hardly a sample size, though it’s worth noting that new home sales surged over six percent in February to their highest levels in seven months.

“Taking into account a wide variety of indicators, the housing market continues its march higher. We expect further gains this year,” said Barclays economist Rob Martin in a report about the new home sales figures Thursday.

Other companies that benefit from a stronger housing market have indicated that they are seeing signs of an uptrend too.

Pablo Vegas, executive vice president with the Indiana-based natural gas and electric utility NiSource (NI) said in an analyst day presentation earlier this month, that the company was benefiting from a solid housing market that shows no signs of overheating.

“We’re not at the peaks of 2007, we’re not at the lows of 2010, we’re actually on an upswing. And the current economic conditions as they look, we think there’s a lot of good opportunity to continue to take advantage of the new construction market,” Vegas said.

It’s worth noting that many homebuilders rely on illegal labor, so assuming Trump’s immigration proposals (especially with regard to deportation) are enacted, homebuilders will have to raise wages in the sector as they search for new, domestic workers.

[Note: This post was written by Matt Palumbo. Follow him on Twitter @MattPalumbo12]

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