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Home prices seen rising, renters see purchase prospects fade: NY Fed survey – Metro US

Home prices seen rising, renters see purchase prospects fade: NY Fed survey

FILE PHOTO: Newly constructed single family homes are shown for
FILE PHOTO: Newly constructed single family homes are shown for sale in Encinitas, California

(Reuters) – U.S. households expect home prices and rents to rise sharply this year, and while growth in both are then seen slowing, renters see their chances of ever owning a home fading fast, according to a new survey by the Federal Reserve Bank of New York.

Home prices are expected to increase 7% in the next year, but 2.2% annually on average over the next five years as mortgage rates are seen accelerating, the survey published Monday shows.

Meanwhile rents are expected to rise even faster, jumping 11.5% over the next 12 months and increasing 5.2% on average each year for the next five.

Last year respondents to the same survey had expected a 5.7% rise in home prices and a 6.6% rise in rents in the year ahead.

The bottom line for renters was stark: they reported seeing just a 43.3% likelihood of ever owning a home, down from 51.6% in 2021 and the lowest reading since the survey began in 2014.

The Federal Reserve is raising interest rates to cool inflation that is at a 40-year high. Mortgage rates already have risen in anticipation, with the average 30-year fixed rate to 5% last week, up nearly two percentage points since late last year.

An industry survey released earlier Monday showed confidence among U.S. single-family homebuilders falling to a seven-month low in April as rising home-borrowing costs and snarled supply chains boosted housing costs and kept some first-time buyers out of the market.

(Reporting by Ann Saphir; Editing by Chizu Nomiyama)

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