Consumers expect home prices to rise 3.21% in the next 12 months, a 3% increase from April's reading of 3.1%, according to the Federal Reserve Bank of New York's May Survey of Consumer Expectations, released Monday.

Home price expectations trended down before the turnaround in December, in response to expectations that the rate of inflation will increase, which consumers are now pegging at 3.14% for the year ahead, an increase from April's 3.09%.

Home prices are expected to increase in every region except for the Midwest, led by the West with a reading of 3.67%, up 44 basis points from April's 3.23%. Close behind were consumers in the South, who expected home prices to increase 3.26% in April to 3.46% in May. This month's reading of the Northeast stood relatively unchanged in April from the previous month, at 3% and 2.96%, respectively.

Every age group expects home price increases in May, in contrast to the nearly unanimous perception seen two months ago. Consumers aged between 40-60 years-old expected home prices to rise 3.83% in May, a slight increase from last month's 3.44%. Older buyers (over age 60) foresaw a more volatile home market ahead, with expectations rising from 3.07% in April to 3.55% in May. Younger buyers below age 40 are least concerned about price increases, but still expect a 2.83% increase in May compared to April's 2.58%.

The median consumer expectation for household income growth in the coming 12 months declined in May to 2.39%, following four months of increases, and last month's reading of 2.83. May's drop has broadened the gap between median household income growth and expected home price change.

The New York Fed interviews approximately 1,200 people from a rolling panel each month for the Survey of Consumer Expectations, and each respondent participates in the survey for up to a year. Read more about May survey results here >>