Conditions for would-be homebuyers and sellers will not improve much in the near term, with mortgage rates set to remain around 7% through the first half of next year, before modest relief arrives later in 2025 and into 2026. However, even small improvements in affordability should lift activity from today’s extremely low levels, leading to a muted recovery in home sales to 4.6m annualised by end-2026. Limited inventory and a solid job market will maintain positive house price growth, but strained affordability will prevent a sharp rebound. We expect modest 4% price increases in both 2025 and 2026.
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