Americans haven't been this gloomy on home prices since at least 2014
- A New York Fed survey found that Americans expect home prices to grow 2.6% in the next 12 months
- That's down form 7% a year ago and the lowest reading since the data set started in 2014.
Household expectations for home price gains slumped to their lowest in nine years, according to a Survey of Consumer Expectations released on Tuesday by the Federal Reserve Bank of New York.
Prices are projected to rise by 2.6% over the next 12 months, down from last year's forecast for a 7% gain and the lowest reading since the data set began in 2014.
The sudden decline could be due to steepening mortgage rates, which have risen on the back of the Federal Reserve's aggressive interest hikes over the past year. The average 30-year fixed rate was 6.42% last week, up from 4.42% a year earlier, Freddie Mac said.
And the New York Fed found that Americans see rates soaring even higher. Survey respondents expect mortgage rates to 8.4% a year from now and to 8.8% in three years' time.
Over the longer term, however, Americans are less downbeat about home prices. Across a five-year horizon, households anticipate average annualized price growth of 2.8%, improved from the prior reading of 2.2%.
Meanwhile, consumers are forecasting rent prices to remain historically elevated, though the outlook has dropped from last year's expectations of an 11.5% increase. Instead, rent is predicted to rise by 8.2% in the next year.
The latest housing data shows home prices in the US are in their longest slump in over a decade, with Case-Shiller data showing Tuesday that prices just fell for the seventh consecutive month.
But the housing market is split as home prices on the West Coast have plunged as much as 10%, while homes in the East have surged.
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