According to a poll released on Monday by the New York Federal Reserve, rising mortgage rates and housing prices are discouraging potential purchasers.
According to the survey, consumers in the United States expect mortgage rates to rise significantly over the next few years, with households estimating rates of 6.7 percent a year from now and 8.2 percent in three years.
The average likelihood of a household buying a home in the next three years fell drastically to 60.7 percent from 68.5 percent in 2021, the first reduction since the annual housing poll began in 2014.
Home ownership remains a smart financial investment, according to respondents, but the outlook has dimmed slightly. Approximately 71% of respondents felt owning property in their zip code was a “very good” or “fairly decent” investment, down from a high of 73.6 percent last year. The percentage of people who think housing is a terrible investment has increased to 9.9% from 6.5 percent a year earlier.
According to Freddie Mac, 30-year mortgage rates in the United States are rising this year and have above 5% for the first time in more than a decade this month. As the Fed focuses on tackling the highest inflation in four decades, they are projected to continue to rise. For the first time since 2018, the Federal Reserve raised its benchmark interest rate in March, and officials are anticipated to keep raising it for the remainder of the year.
Consumers, on the other hand, expect home values to continue to rise even as borrowing costs rise. The New York Fed polled respondents and found that they expect home prices in their zip code to rise by 7% on average over the next year, up from 5.7 percent last year.
Renters, on the other hand, aren’t expecting much relief in the foreseeable future. Rents are expected to rise by 11.5 percent next year, up from 6.6 percent last year, according to households.