Home purchase demand remains largely unchanged since 2016, according to a report from Matthew Pointon, a property economist at Capital Economics.

That, couple with persistently low property inventory and looming rate hikes mean mortgage app performance next year is set to “meh.”

“There seems little chance that mortgage applications will break out of that rut in 2018,” Pointon wrote in his recent US Housing Data Response report.

Here’s his full sentiment:

“The lackluster performance is primarily down to problems on the supply side. After seasonal-adjustment the inventory of homes for sale declined in every month from June to October, and on a per-capita basis is at its lowest level since records began in 1982. That lack of choice is hitting home buying sentiment. Admittedly, the University of Michigan measure rose in October, but that was from a six-year low.” 

The Federal Reserve is set to raise interest rates later this month, with several more hikes expect next year. That means by 2019, we’re faced with mortgage interest rates that may be a full percentage point higher than where we are today.

“Coupled with limited chance of a recovery in the number of homes for sale, that implies home purchase mortgage demand will remain subdued for a third year,” Pointon concludes.