The 30-year mortgage rate ended 2019 at close to 4%, and it is set to stay at around that level over the next or so. But tighter credit conditions will offset some of the benefit of lower rates on housing demand, and existing home sales will be constrained by a record low number of homes for sale. (See Chart 1.) The shortage of existing homes on the market means homebuilders can look forward to another year of strong demand, and with builder confidence at a 20-year high single-family housing starts are well-placed for another strong year. Rental growth eased back in the second half of 2019, but gross yields will hold-up in 2020, maintaining investor interest in the sector.
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