We think markets are too optimistic about Fed rate cuts this year, meaning the recent dip in mortgage rates is just a temporary respite. We expect rates to rebound to 7% and hover around that level throughout the rest of the year. There is still room for sales to improve, aided by less restrictive supply conditions, though the recovery will be very shallow, with existing home sales reaching 4.3m annualised by year-end and 4.7m by end-2026. House price growth will average 4% this year and next as the market remains in a cooler period after the red-hot post-pandemic years.
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