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According to a survey conducted by the New York Fed, respondents expressed their belief that inflation should moderate in the next year, although they still have concerns about rising home prices. The survey respondents also expect home prices to reach their highest level in nearly a year. The Federal Reserve Bank of New York provided the photo for the survey.
July 10 (UPI) — The survey from the Federal Reserve Bank of New York revealed that consumers are anticipating a spike in the average price of homes, reaching the highest level in almost a year. The number of respondents who expected this increase rose by 2.9% from May to June, making it the highest reading since July 2022.
This increase was primarily driven by respondents with a college degree and those residing in the southern and western regions of the United States. Additionally, the Federal Reserve’s monetary policies have resulted in higher lending rates, exacerbating the issue.
During the week ending June 20, mortgage applications declined by 4.4%, while the interest rate for 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,” stated Joel Kanin, a vice president at the Mortgage Bankers Association.
In terms of monetary prospects, the survey showed a decrease of 0.1 percentage point in the number of respondents expecting an increase in income, falling to 3.2%. This is below the trailing 12-month average of 3.6%. Additionally, expectations for spending decreased from 5.6% in May to 5.2% in June.
Regarding employment, approximately 12.9% of respondents expressed concerns about potential unemployment within the next year. This represents a 2 percentage point increase and the highest reading since November 2021.
This news may be welcomed by Federal Reserve officials who are worried that a strong labor market could contribute to higher demand and sustained inflation. According to the survey from the New York Fed, expectations for inflationary pressure declined in the short-term, remained unchanged in the medium-term, and were somewhat elevated five years down the line.
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