June 22, 2024

Couple moving into a house

Photo: Maria Korneeva (Getty Images)

The prospect of owning a house has never felt more out of reach for renters.

Renters’ self-assessed probability of ever owning a home fell 4.3 percentage points to a record low 40.1% as of February, according to a New York Federal Reserve survey published Monday.

A combination of high home prices and mortgage rates, paired with low housing inventory, have put significant pressure on potential home buyers. In March, the median sale price of a home rose 4.8% from a year earlier to $420,321, according to Redfin data. Meanwhile, the number of homes sold plunged almost 10%.

And, according to the New York Fed’s report, Americans are not expecting prices to ease up anytime soon. Expectations for average home price growth for one year ahead rose to 5.1% in February, almost double the 2.6% recorded a year earlier.

At the same time, the average rate on a 30-year-fixed mortgage ticked down Monday to 7.28% from around 7.4%, likely thanks to the Federal Reserve confirming that it will be holding rates steady. But experts believe this relief will be short-lived, expecting the rate to pop back up to the mid-7% range, where it had been sitting prior to the Fed’s meeting last week, or higher.

Households are largely pessimistic on that point, too. They expect mortgage rates to rise even further, hitting 8.7% a year from now and 9.7% in three years’ time — both of which are record highs, according to the New York Fed. On average, however, households surveyed said they believe there’s a 61% chance that mortgage rates will fall over the next 12 months.

And 74.2% of households believe that obtaining a mortgage is “somewhat” or “very difficult” — an 8.4 percentage point increase from last year.

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