According to a study by the New York Federal Reserve, homebuyers are becoming more disheartened by rising mortgage rates and housing prices.
The majority of US householders anticipate mortgage rates to be 6.7% one year from now and 8.2% in three years, according to a recent study.
For the first time since the annual housing survey began in 2014, the average chance of purchasing a property if a family moved within the following three years fell dramatically, from 68.5% in 2021 to 60.7% in 2024.
While most respondents still consider buying a house a good financial move, their optimism has dimmed significantly. Following last year’s record high of 73.6%, this year only 71.2% of respondents rated purchasing property in their area code as a “very good” or “fairly good” investment. The percentage of respondents who think real estate is a terrible investment rose to 9.9% from 6.5% a year earlier.
According to Freddie Mac, this month marked the first time in almost a decade when 30-year mortgage rates in the United States reached 5%. As the Fed shifts its focus to tackling the hottest inflation seen in four decades, they are likely to continue rising. The Federal Reserve increased its key interest rate in March, the first increase since December 2018, and more increases are anticipated throughout the year.
Even though consumers anticipate house price increases as borrowing rates rise, they still plan to make large purchases in the near future. The New York Fed conducted a study, and the results showed that respondents anticipated house prices in their area to increase by an average of 7% over the following year, up from a projected increase of 5.7% the previous year.
