Mortgage rates have edged down since the end of March, but that didn’t prevent a fall in the share of households who see now as a good time to buy a home to a record low in April. House price growth of 12% y/y, and record low inventory, make for a tough home buying environment. That said, with so many frustrated buyers and lending standards set to be eased, we doubt home sales are set for a sharp fall this year even as mortgage rates rise to around 4% by end-2021. Housing starts, which have been held back in recent weeks by surging lumber prices, are also set for a strong second half of the year. Rental markets will benefit from the reopening of cities, which will help push vacancy rates down and reverse some of the recent fall in rents. We expect effective rental growth will rise from -3.4% y/y in Q1 2021 to around 2% y/y by the end of the year.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services