Housing activity is finally showing some signs of life. New home sales and single-family housing starts have both reached 10-year highs, as builders have started to respond to very tight market conditions. However, inventory levels are set to remain very low for the next few months, which will constrain existing home sales next year. The tax bill should prove to be a small positive for the housing market. But with mortgage interest rates rising, and credit conditions tight, we suspect house price growth has now peaked at 6% y/y.
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