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The outlook for renters who hope to some day buy a home has never been bleaker, according to a new survey.
Renters surveyed in February put the probability of ever owning a home in the future at 40.1% on average, according to the Federal Reserve Bank of New York’s annual SCE Housing Survey released on Monday. That’s down from 44.4% a year ago, and the lowest on record dating to 2015.
Hopes for homeownership plunged fastest in the high-priced Northeast, where renters put the probability of owning at 25.8%, sharply down from 51.4% last year. Expectations also fell 6 percentage points in the Midwest, while they stayed roughly flat in the South and ticked up 2.5 percentage points in the West.
Most renters say they would rather own a home if they were able, with 69.9% saying they would either prefer or strongly prefer owning a home if they had the financial resources to do so.
But high mortgage rates, along with home prices that continue to climb, are pushing homeownership increasingly out of reach for many potential first-time buyers.
Mortgage rates averaged 6.78% in February, when the survey was conducted, according to Freddie Mac. For the week ending May 2, the average rate on 30-year fixed mortgages climbed to 7.22%, the highest since November.
The New York Fed survey found that renters’ perceptions about the ease of obtaining a mortgage have declined substantially, with just 10.1% of renters responding that obtaining a mortgage is somewhat or very easy, the lowest combined rate on record.
Meanwhile, 74.2% say that obtaining a mortgage is somewhat or very difficult, up 8.4 percentage points from last year, and well above the 2021 low of 50.5%.
The survey found a grim outlook on future mortgage rates, with the average household now expecting mortgage rates to rise to 8.7% a year from now and 9.7% in three years, both of which are the highest forecasts on record.
Home prices also remain high. National home prices rose 6.4% annually in February, according to data from the S&P CoreLogic Case-Shiller Home Price Index released last week. That was the largest year-over-year rise since November 2022.
The new survey found that respondents on average expect housing prices to increase 5.1% over the next year. That’s nearly double the 2.6% expected rate one year ago, and above the average of 4.2% before COVID-19.
Renters also expect to pay more in the coming year, with expectations for rent growth rising by 1.5 percentage points to 9.7%.
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