We think the window for further Fed interest rate cuts has closed, so mortgage rates should remain near their current 7% level this year, before a little more relief arrives in 2026. There will still be 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. Slightly stronger demand should counter rising inventory, ensuring continued house price growth. We have pencilled in 4% house price gains in both 2025 and 2026.
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