Surging Treasury yields have pushed mortgage rates above 7.5%, higher than we had anticipated. If these borrowing rates persist, lending and sales volumes could fall even further in the near term creating a risk that house prices fall rather than stagnate as we forecast. However, we still expect a slowdown in the economy to lead to a reversal of the recent rises in Treasury yields and mortgage rates later this year, allowing buyer demand to strengthen. This should set the scene for a pickup in housing market activity in late 2024, as conditions for buyers slowly improve.
Meanwhile, higher risk-free rates have triggered an 8.7% fall in multifamily capital values to date, which we expect to grow to 25% from peak to trough.
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