Mortgage interest rates have been close to 4% since October, and we expect they will stay at
that level over the next couple of years. However, the support that will give to housing demand will be
offset to some extent by tighter mortgage lending standards and a slowdown in employment growth.
Existing home sales will be constrained by a lack of inventory, but new home sales should see a decent
rise. That, and a shift to the construction of cheaper homes, means single-family housing starts will rise to
just under 1m annualised by the end of 2021. Lower mortgage rates mean we have increased our house
price forecast, and now expect a rise of 2% next year. Rental vacancy rates will see a small rise over the
next year, and that will push rental growth down to 3.3% by the end of next year.
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