The potentially inflationary policy mix of the incoming Trump administration will limit the decline in mortgage rates this year, squashing hopes for a major recovery in home sales. We expect transactions to remain depressed, reaching just 4.3m annualised by end-2025, before showing more improvement in 2026, ending the year at 4.7m. Slightly stronger demand should counter rising inventory, ensuring continued house price growth. Accordingly, we have pencilled in 4% house price gains in both 2025 and 2026. Elsewhere, new homes will continue to attract first-time buyers despite growing resale supply, with builders offering hefty incentives. Therefore, we expect new home sales to grind higher to 0.73m annualised by end-2025 and 0.75m end-2026, providing support to single-family home construction. In the rental market, new apartment supply has peaked, with completions set to decline in the coming years. Weaker supply will be outpaced by solid demand, pushing the vacancy rate down to 5.4% by end-2026 and supporting a modest pick-up in rent growth to 2.5%.
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