Fed Survey: Consumers Expect Slower Home Price Growth

Americans’ expectations for home price changes fell in 2019, according to results from the Federal Reserve Bank of New York’s 2019 SCE Housing Survey, an annual companion to the Survey of Consumer Expectations. The survey showed home price growth at the one-year outlook was 3.6%, down from 4.6% last year and reaching the second lowest level since the survey began in 2014. Home price growth expectations at the five-year outlook were almost a full percentage point lower than last year, landing at 2%. A majority—65%—of respondents continue to view housing as a good financial investment, though the share of those that believe it is a “very good investment” declined nationwide.

Consumers’ expectations for future mortgage rates rose about 50 basis points at both the one- and three-year horizons. Among renters, preference for owning a home was strong—71.5% said they would prefer or strongly prefer to own a home instead of rent if they had the financial resources to do so, up from 2018. The percentage of renters who view obtaining a mortgage as difficult fell from 67.5% in 2018 to 57.9% in 2019. The percentage of owners who said they expect to refinance over the next year fell to 8% from 8.8 percent a year prior.