Housing market resilient to banking sector turmoil

The US housing market has been largely unaffected by the banking sector turmoil. Indeed, buyer sentiment rose to an 11-month high in April and activity appears to have bottomed out. Tighter credit conditions could yet weigh on the market, but the latest Senior Loan Officer survey reported only a modest tightening in the first quarter. We still expect buyers to face growing headwinds from a weakening economy, as the US enters a recession in the second half of the year. We think this will keep activity subdued and cause another dip in house prices. The recession will hit apartment demand too, which contracted in Q1. Alongside a surge in new supply that will prompt a small fall in rents this year.