Consumers feel more positive about the housing market in the next 12 months, as median expected home price change dropped slightly to 3.00% in January, according to the monthly Survey of Consumer Expectations released Monday morning by the Federal Reserve Bank of New York.
This is a two basis-point change compared to last December’s 3.02%, and 42 basis-point decrease from January 2015. An upward housing market in 2015 has given consumers more reason to believe in a strong 2016 market. Consumer predictions of home price volatility have gone down in recent years, but have stayed fairly stable since August 2015.
Consumers in the Northeast region have the most faith in the housing market, expecting a moderate 2.59% change in future home prices. People in the South region came in second with a 2.90% expected home price change, followed by the Midwest and West, with a 3.00% and 3.27% median point prediction, respectively.
Younger consumers under 40 years-old are the most optimistic among all age groups, with a median prediction of 2.82%, while consumers over age 60 see the most volatility in the market, with an expected home price change of 3.00%. However, it's worth noting that predictions from the older age group have declined 77 basis-points since November 2015, indicating growing confidence among consumers age 60 and older.
Median expected growth in household income over the next 12 months decreased month-over-month, from 2.28% to 2.22%, contributing to a narrower gap between household income growth and home price change in January. The gap has narrowed substantially over the past two years.
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 January survey results here >>