With 30-year fixed mortgage rates now at a near three-year high of 7.3%, the near-term outlook for home sales and prices remains weak. However, we expect things to improve from next year as energy prices fall back and the Fed delivers less tightening than is priced in by markets, supporting a decline in mortgage rates to 6.25% by end-2027. This should provide some impetus to activity. We expect transactions to recover to 4.10m in 2027 and 4.25m in 2028, up from a likely 4.00m this year. We expect price growth to accelerate to 2.5% and 4.0% in 2027 and 2028, respectively, from a likely 1.5% gain this year.
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