Consumers expect median home prices for the next 12 months to rise 3.3%, the highest in 13 months, according to the Federal Reserve Bank of New York's July Survey of Consumer Expectations, released Monday. July's result is a 19-basis point increase from June's reading of 3.11%, and a 15-basis point gain from July 2015.
Future median home prices trended up during the Spring sales season until the passage of Brexit in June, when fears rose that the U.S. housing market could suffer from possible global economic turmoil. But consumer expectations have show signs of picking up again amid good news from the labor market.
Home prices are expected to make big gains in the West and Midwest, from 3.2% and 3.12%, to 3.44% and 3.4%, respectively. Staying unchanged were consumers in the Northeast, who expected home prices to hold firm at 3% in July. Those in the South foresaw a slower price rise in next year's home prices, lowering their expectations from June's 3.2% to 3.17% in July.
Two out of three age groups expressed a positive outlook on the future housing market. Consumers aged between 40-60 years-old expected home prices to rise 3.31% in July, up from last month's 3.2%. Younger buyers below age 40 bumped up their expectations from June's 2.62% to July's 2.66%. Older buyers (over age 60) lowered their June numbers but still believe that home prices are going to go up by 3.89% in the next 12 months, the largest price hike among all groups.
The median consumer expectation for household income growth in the coming 12 months marginally climbed from 2.75% to 2.81%, the second straight month of an increase after declining in May. July's number 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 >>