July 10 (UPI) — Consumers expect to see home prices spike to their highest level in nearly a year, though the mood on inflation is improving somewhat, a survey from the New York Fed revealed on Monday.
The number of respondents to a survey from the Federal Reserve Bank of New York who said they expected to see the average price of a home increase jumped by 2.9% from May to June, the highest reading since July 2022.
The increase was driven largely by respondents with a college degree and those living in the southern and western United States. Compounding the issue is higher lending rates, which come in response to monetary policies at the Federal Reserve.
For the week ending June 20, mortgage applications declined 4.4%, while the rate on a 30-year, fixed-term loan increased from 6.63% to 6.68% during the same period.
“Purchase applications decreased for the first time in a month, as homebuyers remained sensitive to rate changes,” said Joel Kanin, a vice president at the Mortgage Bankers Association.
On monetary prospects, the number of respondents to the New York Feds survey expecting more income declined by 0.1 percentage point to 3.2%, below the trailing 12-month average of 3.6%, while expectations on spending declined from 5.6% in May to 5.2% in June.
On the jobs front, about 12.9% of the respondents said they felt they could become unemployed in the next year, an increase of 2 percentage points and the highest reading since November 2021.
That should be welcome news for Federal Reserve officials worried that a resilient labor market would incentivize demand and keep inflation elevated. The survey from the New York Fed showed further expectations of inflationary pressure declined over the short-term, were unchanged over the medium-term and somewhat elevated five years out.
