With new-home sales moving to historic highs last year, many ask how long the U.S. housing market will continue its present run. The answer: for quite some time unless mortgage rates or economic conditions change significantly. Our demand model shows that home-buying activity should increase about 1 percent per year over the remainder of the decade. Our model simply assumes that: everyone gets 1 year older each year, immigration trends stay constant, home prices rise at the same rate as incomes, the home-buying rate and home ownership rate by age remain the same, the new-home share of total sales volume remains the same, and mortgage rates remain stable. We are highly confident in all of the assumptions except mortgage rates, which are perfectly priced every day based o...
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