Americans expect slower growth in home prices in 2023

U.S. households expect home prices to grow 2.6% over the next 12 months, down sharply from 7% a year ago, according to data released today by the Federal Reserve Bank of New York as part of its broader Survey of Consumer Expectations. At the same time, expectations over the five-year horizon increased, with households anticipating average annualized price growth of 2.8% compared to 2.2% a year ago.

Households expect mortgage rates to rise to 8.4% a year from now and 8.8% in three years’ time, according to the survey. They expect rents to increase by 8.2% over the next 12 months, compared with 11.5% in February 2022. Renters put the probability of owning a home in the future at 44.4%, up slightly from 43.3% a year ago.