Record low mortgage rates have helped housing demand to recover swiftly from the shock of the coronavirus, with mortgage applications for home purchase recently hitting a 10-year high. Home sales have also jumped back, but a second wave of shutdowns, and record low inventory, will weigh on existing home sales over the remainder of the year. The new home inventory is healthier, and strong sales will help single-family housing starts recover to pre-virus levels in the first quarter of 2021. The strength of demand means we no longer expect house prices to fall, but tighter credit conditions mean growth will slow to around 0%. Rental demand has seen a sharp fall as younger Americans have lost their jobs. But with so few homes to buy, the medium-term outlook for demand is positive. After dipping to -1% by the end of this year, rental growth is set to recover to 3.5% by end-2022.
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