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%.
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