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N.Y. Fed: Short-Term Home Price Expectations Drop Sharply

David Krechevsky
Mar 28, 2023
Federal Reserve Bank

Average one-year-ahead home-price growth expectations fell to 2.6%, the lowest reading since the survey began in 2014.

U.S. households participating in the Federal Reserve Bank of New York’s annual housing survey said they expect home prices over the next 12 months to increase at the slowest pace since the survey began in 2014. 

In contrast, the federal bank said, home price expectations over the next five years increased from last year’s survey. 

The housing survey is part of the bank’s broader Survey of Consumer Expectations (SCE) and provides information on consumers’ housing-related experiences and expectations. 

Expectations about the one-year-ahead change in the cost of rent were considerably higher than home price expectations, but declined relative to last year’s series high, the bank said. 

Homeowners’ expectations about the likelihood of refinancing their mortgage over the next 12 months fell sharply to a new series low, it said. 

The probability of buying a home conditional on a move over the next three years rose overall, driven by higher expectations among current owners. A large majority of households continue to view housing as a good financial investment, although the share characterizing housing as a “somewhat good” or “very good” investment declined slightly from February 2022.

The SCE Housing Survey has been conducted annually since 2014. Here are some of the key findings for the 2023 survey:

Home Prices/Rents

  • Average one-year-ahead home-price growth expectations fell sharply to 2.6% from 7% in February 2022, the lowest reading since the survey began in 2014. The previous record low for one-year-ahead home price growth expectations was 3.3%, recorded in 2016.
  • Households’ home-price growth expectations for the five-year horizon were up from last year. Households expect prices to rise by 2.8% per year on average, for the next five years, slightly above their expectation for the next year. 
  • While rent change expectations moderated, they remain high by historical standards and in comparison to home-price growth expectations. On average, households expect the cost of rent to increase 8.2% over the next 12 months, compared to 11.5% in February 2022. Over the next five years, households expect average annual rent increases of 5%, down slightly from 5.2% a year ago. Households expect rent increases to substantially outpace home price increases over the next five years.

Housing Outlook

  • While attitudes toward housing as a financial investment remained strongly positive, they weakened slightly from the previous year, as 68.4% of all respondents characterized buying property in their zip code as a “very good” or “somewhat good” investment. That is slightly below the readings of the last three years, but still above the levels of optimism that prevailed in the pre-pandemic period. The share of respondents reporting that housing is a “bad” or “somewhat bad” investment fell to 7.9% from 9.9% a year ago.
  • Average expectations of residential mobility (the percent change of moving to a different primary residence) fell to new series lows at both the one-year (15%) and three-year (24.9%) horizons, continuing a declining mobility trend since 2014.
  • The average expected probability of buying a home if the household were to move within the next three years rose slightly to 62.2%, from 60.7% in 2022. Despite this increase, the probability of buying conditional on a move remains well below its 2021 peak of 68.5%. 

Mortgage Rates

  • On average, households perceive that national mortgage rates are currently higher than pre-pandemic levels and expect them to rise further in the future. Households now expect mortgage rates to rise to 8.4% a year from now and 8.8% in three years’ time.
  • Still, households expect that there is a 49.1% chance that mortgage rates will fall over the next 12 months, rebounding from last year’s series low of 41.8%.


  • Homeowners reported another large decline in their expected probability of refinancing their mortgages in the next year; the average probability declined from 7.7% in 2022 to 4.1%, a series low, this year.
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