Good news for house sellers. Bad news for buyers.
U.S. consumers have high hopes for house prices, despite interest rates that have doubled over the last two years.
Expectations for growth in median home prices increased to 2.6% in May from 2.5% in April, the highest reading since July 2022, according to the latest Survey of Consumer Expectations released Monday by the Federal Reserve Bank of New York.
The increase in house-price expectations was particularly notable among people with annual household incomes above $ 100,000, and those who live in the Western U.S. (The monthly survey gathers respondents’ expectations about inflation, the labor market, and household finances.)
“Property prices continue to rise, albeit at a much slower rate than during the early days of the pandemic.”
“Perceptions of credit access compared to a year ago deteriorated slightly in May,” the Fed survey added. “The share of households reporting that it is more difficult to obtain credit now than a year ago increased, while the share reporting that it is easier declined.”
Property prices continue to rise, albeit at a much slower rate than during the early days of the pandemic. The median price of homes for sale increased by 0.9% from April to May, according to a Realtor.com’s latest Monthly Housing Market Trends Report.
High interest rates, low housing inventory
An increasing lack of inventory is one driving factor pushing up the price of homes.
“The number of homes actively for sale increased by 21.5% compared to last year,” the Realtor.com report noted. “The total number of unsold homes, including homes that are under contract, decreased by 0.2% compared to last year.”
The total number of homes for sale, including those that were in contract but not yet sold, fell by 0.2% last month compared to the same period a year ago. This marks the first time total listings have declined on an annual basis since June 2022.
Still, millions of would-be homeowners appear to be sitting on the sidelines. The monthly Fannie Mae FNMA, -1.84% Home Purchase Sentiment Index fell in May, and is nearing its survey low. In May, 19% of consumers said it was a good time to buy a home, compared to 23% last month.
(Realtor.com is owned by News Corp. NWSA, -1.09%, the same parent company as MarketWatch.).