With both home and rent prices expected to increase over the next 12 months, a pair of surveys reveal that renters are becoming increasingly pessimistic about their chances of future homeownership.
Households anticipate that median U.S. home prices will grow 4.0% over the next year, according to a housing survey conducted in February as part of the Federal Reserve Bank of New York’s Survey of Consumer Expectations (SCE). A year ago, survey participants expected year-ahead home price growth of 3.8%.
The SCE housing survey found that households expect that the 30-year fixed-rate mortgage will rise to a median of 7.0% over the next 12 months and will remain at that level for the next three years. Last week, the 30-year rate increased slightly to 6.67%, according to Freddie Mac. In 2024, it reached a high of 7.22% during May.
Rent prices are expected to increase by 8.0% over the next year, according to the SCE housing survey. Last year, those surveyed predicted a 7.1% increase. And in a sign of rising pessimism, just 33.9% of renters polled think they will become future homeowners, which is a decrease from 40.1% a year ago.
Another survey paints a similar picture. According to a housing poll from NeighborWorks America, a nonprofit that provides grants and other assistance to community development organizations, 48% of renters in the U.S. do not think it is possible for them to ever become homeowners. Additionally, just 15% of renters view homeownership as being “very possible” in their future, with another 26% saying it is “somewhat possible.”
Unsurprisingly, optimism increases among potential homebuyers who earn more. The NeighborWorks America survey shows that 58% of renters with annual incomes greater than $100,000 think that homeownership is very or somewhat possible, compared with 37% of renters making $50,000 or less.
“The financial pressure on renters today is probably as strong as it’s been in a very long time,” Marietta Rodriguez, NeighborWorks America’s president and CEO, said in press release. “Nevertheless, I know that there are pathways to homeownership for renters.”
NeighborWorks America cites down payment costs as the biggest challenge for renters seeking to buy a home. The congressionally chartered nonprofit recommends working with a housing counselor to assess homebuying options. The organization also states that there are more than 2,400 down payment assistance programs in the U.S.
