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How do Consumers View Home Price Growth?

Consumers know that there’s only one way that home prices are going and that’s up according to the April Survey of Consumer expectations by the Federal Reserve Bank of New York.

The survey indicated that consumer expectations for home price growth rose 3.7 percent. This is the highest reading for this indicator since November 2014 and slightly above the 12-month average of 3.3 percent. On a month-over-month basis too, consumer expectations on home prices going up increased from 3.5 percent in March. The increase was driven by respondents in the South and Midwest regions of the country, the New York Fed said.

The monthly survey, which contains information about how consumers expect overall inflation and prices for food, gas, housing, and education to trend also tracks their views on jobs prospects, earnings growth, and future spending as well as access to credit.

The survey found that consumers are still largely confused over access to credit with consumer perceptions of credit access compared to a year ago and expectations for the year ahead indicating mixed results as some consumers said that credit access would improve and an equal number felt that it would worsen.

Households also expect their spendings to rise with the survey saying that median household spending growth expectations increased to 3.3 percent, well above the 12-month average of 2.9 percent. However median expected household income remained unchanged at 2.9 percent in April and was 0.1 percent above its trailing 12-month average.

When it came to expectations on inflation, consumers across all income groups expected inflation to rise in the short term. The New York Fed said that median inflation expectations increased to 3 percent at the one-year and three-year horizon, up 0.2 percent and 0.1 percent respectively from March. “Both measures have been trending upwards since August of last year,” the New York Fed said. “The last time both measures reached this level was during the temporary uptick in inflation expectations in early 2017.”

The expectation of an increase in medium-term inflation, the survey found, was driven by respondents with incomes of $50,000 or more.

Consumers also expected median incomes to grow over the next year, with expectations rising from 2.6 percent in March to 2.7 percent in April.

About Author: Radhika Ojha

Radhika Ojha, Online Editor at the Five Star Institute, is a graduate of the University of Pune, India, where she received her B.A. in Commerce with a concentration in Accounting and Marketing and an M.A. in Mass Communication. Upon completion of her master’s degree, Ojha worked at a national English daily publication in India (The Indian Express) where she was a staff writer in the cultural and arts features section. Ojha also worked as Principal Correspondent at HT Media Ltd and at Honeywell as an executive in corporate communications. She and her husband currently reside in Dallas, Texas. You can contact her at Radhika.Ojha@theMReport.com.

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