The share of households seeing now as a good time to buy a home has fallen to 39-years lows, as booming house prices, tight credit conditions and record low inventory have weighed on sentiment. But the share actually planning to buy has not seen such a large dip, so we expect existing home sales will moderate rather than crash. That easing in demand, and a gradual rise in mortgage rates, will help cool house price growth from record highs to around 10% y/y by the end of the year. In contrast to homebuying demand, rental demand has recovered strongly. Rental vacancy rates in some cities are now falling back, and timelier measures of rents are picking up. Given low risk-free interest rates that will boost apartment capital values and push total returns to 10.8% in 2021.
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