Americans Forecast Rising Home Prices Amid Gloomy Buying Sentiments

Only 21% of Americans consider it a good time to buy a house, while 76% view it as a bad time, indicating a persistent pessimism about the homebuying market, according to a Gallup poll.

The sentiment aligns closely with last year’s figures, marking one of the lowest points in Gallup's historical data.

The survey indicates that despite a gloomy outlook for buyers, expectations for rising home prices remain high. Around 68% of respondents anticipate higher local home prices over the next year — an increase from 56% last year and close to the peak levels recorded in previous years.

The rise in price expectations comes even as the actual costs of buying a home, including high mortgage rates and home values, discourage many potential buyers. The prevailing market conditions suggest that while the desire for homeownership remains, the financial barriers are increasingly insurmountable for many Americans, particularly younger adults and those without savings.

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In the Midwest and West, optimism about rising home values has rebounded, marked by the highest year-over-year increases in positive expectations.

Despite varying regional sentiments, most Americans, ranging from 66% to 70% in all regions, anticipate an increase in home prices, signaling a broad expectation that the market could tighten further.

The general expectation is set against the realities of entering the housing market. The survey found that while many expect local real estate values to climb, purchasing homes under current conditions remains daunting for most Americans.

The Federal Reserve’s continued decision to hold interest rates steady makes potential buyers, particularly first-timers navigating an already challenging fiscal environment, unaffordable.

Despite the discouraging conditions, the increased expectancy of rising home prices isn't confined to specific demographics.

Across the board, from people living in cities to those in suburban and rural areas, price increases are anticipated. The sentiment holds regardless of income level or political affiliation, indicating a widespread belief in a rebounding market.

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Interestingly, the survey found a contrast in perspective between renters and homeowners.

While 73% of renters expect prices to rise, roughly 64% of homeowners share the outlook. That difference may reflect renters’ concerns about potentially higher future costs should they purchase homes amid fluctuating market conditions.

The disparity in housing affordability and market optimism also extends across age groups.

Younger Americans, particularly those under 50, are more optimistic about home price increases than their older counterparts, with 75% of the younger group expecting rises compared to 60% of older Americans. That optimism among younger people comes despite them being more likely to report housing costs as a financial strain.

Approximately 14% of Americans now identify housing costs as the most pressing financial problem facing their families, second only to general inflation concerns. The issue is particularly pronounced among younger Americans, who are more likely to cite housing costs as their top financial concern, a sentiment likely exacerbated by their relative lack of wealth compared to older generations.

As the Fed holds off on interest rate cuts amid sticky inflation, the cost of borrowing remains a barrier to home buying.

The landscape suggests that unless there is a Fed policy shift or market adjustment, the dream of homeownership may remain out of reach for many Americans, particularly those just entering the market or with less accumulated wealth.

With the prospect of continued high housing prices and the potential for one interest rate reduction later in the year, prospective buyers may find some relief on the horizon.

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