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 pre-pandemic 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.