VOL 2024 ISSUE 5

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VOL 2024 ISSUE 5



Housing Price and Rent Growth Expectations Increase

Households expect home price growth to increase to 5.1 % over the next 12 months , up from 2.6 % a year ago , according to the Federal Reserve Bank of New York ’ s 2024 SCE Housing Survey that was released this week . This is the second highest reading in the survey ’ s history , but below the series high of 7 % in 2022 . The increase is broad based across demographic groups , but particularly large for respondents residing in the South . The survey also looked at household expectations for mortgage rates and how it might impact financing decisions , as well as renters ’ expectations for rent prices and the possibility of homeownership .
Mortgage Market Households anticipate mortgage rates to rise to 8.7 % a year from now and 9.7 % in three years ’ time , both numbers a series high . But households on average still believe there is a 61 % chance that mortgage rates will fall over the next 12 months , which is also a series high .
Home owners ’ expected probability of refinancing in the next year rebounded slightly to 6.3 % from 4.1 % last year , but remained well below the pre-pandemic average of 10.4 %.
Rental Market Households also expect rents to increase by 9.7 % over the next 12 months , compared with 8.2 % in February 2023 , reversing last year ’ s decline . Renters ’ perceptions about the ease of obtaining a mortgage deteriorated substantially , as 74.2 % stated that obtaining a mortgage is somewhat or very difficult . This represents an 8.4 percentage point increase from last year and is well above the 2021 low of 50.5 %. Renters ’ self-assessed probability of ever owning a home decreased by 4.3 percentage points to 40.1 %, which also reflects a series low .
Housing Remains a Good Investment Although attitudes toward housing as a financial investment remained strongly positive , they weakened slightly from the previous year , as 67.1 % of all respondents characterized buying property in their zip code as a “ very good ” or “ somewhat good ” investment . This is slightly below the readings of the last three years , but still above the levels of optimism that prevailed in the prepandemic period . The SCE Housing Survey , which has been fielded annually in February since 2014 , is part of the broader Survey of Consumer Expectations . Learn more about the survey , including additional data , at newyorkfed . org .