For the first time ever, half of younger renters — those under age 50 — don’t think they will be able to buy a home

US renters are feeling less optimistic about their chances of ever owning a home, and households' expectations of home-price growth have picked up again after a decline last year, according to a new survey from the Federal Reserve Bank of New York.

The survey, conducted in February, revealed that amid high home prices, elevated mortgage rates, and challenges in saving for a down payment, only about four in 10 renters believe they will be able to purchase a home. This represents the lowest level since the survey began a decade ago.

For the first time, half of younger renters, those under age 50, do not believe they will be able to buy a home. In the Northeast, the share of renters who think they will be able to buy has dropped significantly over the past year, from 51% to nearly 26%.

Expectations regarding changes in rent costs have also increased sharply compared to last year. Renters anticipate a 1.5 percentage point increase in rental costs over the next year, reaching 9.7%, which reverses the decline seen last year. Over the next five years, average rent expectations are at 5.1% per year, surpassing projections for wage growth.

Renters' perceptions of the ease of obtaining a mortgage have deteriorated significantly. Nearly three-quarters now believe obtaining a mortgage would be a problem, compared to about half before the pandemic.

Homeowners are also less inclined to move. Expectations for residential mobility, or the likelihood of moving to a different primary residence, have hit new series lows at both the one-year (13.4%) and three-year (24.5%) horizons, continuing a declining trend in mobility.

With US mortgage rates expected to rise further, buying a home is becoming increasingly challenging. Households anticipate mortgage rates to reach 8.7% a year from now and 9.7% in three years, both of which are survey series highs. If realized, these rates would be the highest since the early 1990s.

Consumers also expect home prices to increase. Home prices over the next five years are projected to rise at a 2.7% annualized rate, roughly in line with inflation expectations.