Consumers expect median home prices for the next 12 months to be roughly steady at 3.26%, according to the Federal Reserve Bank of New York's August Survey of Consumer Expectations, released Monday. August's result is a 23-basis point gain from August 2015 and is also within the range seen in the past year.
The positive outlook given by consumers is at odds with the slowing August job market that BUILDER previously reported. Earlier this year, consumers' home price expectations trended up in Spring but cooled off a bit in June, when the U.K. voted to exit the European Union. Going forward, a possible rate hike in next week's Federal Reserve policy meeting--suggested by Fed's chairwoman Janet Yellen in late August--could lead up to greater volatility on consumers' perception of the home market.
Home prices are poised to rise most in the West and Midwest, from 3.44% and 3.4%, to 3.5% and 3.53%, respectively. The Northeast moved from July's 3% to August's 3.11%. Consumers in the South, however, foresaw a drop in future prices, with the expectation falling from a rise of 3.17% in July to 3% in August.
Consumers of different age groups also revealed differing expectations. Those aged over 60 remained the most optimistic about home markets, raising their expectations from July's 3.89% to the 4.35% in August. Middle-aged consumers between 40 and 60 believed home price growth would slow from 3.31% to 3.1%. Young people under 40 anticipated the price to rise 2.62%, lower than the 2.66% in the previous month.
Expected household income growth in the coming 12 months is on the rise as the median point prediction moves up from 2.81% to 2.93%. This is the third straight month of an increase since the rate lost 44 basis points in May. August's result has narrowed 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.