Trump's affordability push to have limited success

President Trump’s proposals to improve housing affordability are not enough to move the dial, which would require a sustained decline in mortgage rates. Unfortunately, our positive outlook for the real economy and relatively hawkish Fed view suggest that mortgage rates will rise back to 6.5% in the second half of this year and remain at that level in 2027. Even so, the modest improvements in affordability seen towards the end of last year should be sufficient to support slightly stronger sales activity, with existing home sales averaging 4.4m annualised in 2026, up from 4.1m last year. New home sales should also see a modest improvement, averaging around 700,000 annualised. House prices narrowly avoided falling last year, but we think the market is set up for a slightly stronger 2026, with prices rising by 4%.