Households predict higher mortgage rates and rent increases

Many Americans are losing faith in President Donald Trump's impact on the housing market. A report from the Federal Reserve Bank of New York shows that households expect 30-year mortgage rates to rise to about 7 percent in the next year. This news comes as Americans brace for higher rent and mortgage payments. Home prices have surged in recent years due to low housing inventory and strong demand, making it tough for many people to buy homes. After the Federal Reserve raised interest rates to combat inflation, mortgage rates jumped significantly. Analysts had hoped rates would drop to around 5 percent this year, but now they predict rates will stay between 6 and 7 percent into 2026. In the same survey, households expect rents to increase by 8 percent over the next year, a rise from last year’s expectation of 7.1 percent. People are increasingly doubtful about owning a home, with the survey showing only a 33.9 percent chance of becoming homeowners, down from 40.1 percent the previous year. This trend has been ongoing since 2016. Despite expectations for home prices to rise by about 4 percent in the coming year, longer-term forecasts show stagnant growth rates. Experts warn that the housing market has been unhealthy, partly due to unsustainable low interest rates driving up home values. Many potential buyers feel discouraged by rising costs associated with homeownership beyond just mortgage payments. Some experts suggest that people are taking action to buy homes now, despite high rates. They argue that increased inventory allows buyers to have more options. However, many view the housing market's future with uncertainty, particularly under Trump's administration. The growing difficulty in achieving homeownership reflects broader economic concerns. Experts point to high housing costs, coupled with rising expenses in other areas, as reasons why fewer Americans see owning a home as an attainable goal. The situation could lead to less economic stability overall.