Homebuilders and housing supplier stocks jumped on Wednesday in the wake of the midterm elections.

Lennar (LEN) was up more than 8%, and D.R. Horton (DHI) and PulteGroup (PHM) also rose around 8% in midday trading.

Housing suppliers also rode the wave. Home Depot (HD) soared more than 17% before paring gains to 5%. Lowe's (LOW) jumped 15% and is now up 7%.

The 10-year Treasury yield (^TNX), the benchmark for mortgage rates, moved slightly lower.

The Democrats' sweep in Congress is fueling anticipation of new action in Washington on housing affordability, a prominent issue during the midterm campaign, and the potential for lower mortgage rates in a shifting macroeconomic environment.

The housing market is mired in an unyielding rut, hemmed in by high home prices and high mortgage rates. Homebuyers, especially younger, first-time buyers, are struggling to break into the market.

Read more: How to get the lowest mortgage rates right now

Despite the deadlock, Congress passed the first major piece of housing legislation in decades this year, a sprawling bill that addresses housing affordability by encouraging more homebuilding, expanding financing options, providing grants for local governments that ease zoning restrictions and expand the housing supply, and streamlining environmental review processes, among other provisions.

With Democrats assuming power and promising to address Americans' cost-of-living concerns, more legislative action could materialize — particularly on the demand side.

TD Cowen wrote in a post-election note that Rep. Maxine Waters of California, who could become chair of the House Financial Services Committee, plans to focus on housing, including down payment help and funds to renovate public housing. The analysts added, however, that they "remain dubious it will become law."

Analysts for UBS cited additional affordable housing grant funding and tax benefits for first-time homebuyers and multifamily housing developers as potential areas for congressional action.

Molly Moorhead is economics editor for Yahoo Finance.