About 19% of American households surveyed in May expected to move in the next 12 months, according to the Survey of Consumer Expectations report from the Federal Reserve Bank of New York published Monday. That was the highest May reading in two years.
While the share was up from April, it failed to reach the 21.7% set in March that was the highest in data that goes back six years. That was the month that mortgage rates had the biggest one-week tumble in a decade, as measured by Freddie Mac. Since then, rates have continued to decline, but a growing uncertainty about the economy has caused some Americans to hesitate about bidding on homes.
“We expected more people to be ready to get into the market, because of the low mortgage rates and rising wages, but some have remained on the sidelines,” said Robert Dietz, chief economist for National Association of Home Builders. Economic uncertainties “are causing some prospective homebuyers to be reluctant,” he said.
Households also reported lower expectations of future income growth, according to the New York Fed report. That measure dropped to a 2.8% gain in May, from 2.9% the month before. A measure of income uncertainty stood at an eight-month high.
While inflation-adjusted household income is 15% higher than the post-recession low reached in June 2011, it’s been a long slog, said Gordon Green on Sentier Research. The U.S. median annual household income in April was $64,016, Green said.
“Real median household income has continued to display an upward trend over the past 12 months,” said Green. “We continue to monitor the course of inflation, as this has a significant effect on the trend in real median annual household income. We are at a point now where real median household income is 4.2% higher than January 2000. Not an impressive performance by any means over a period spanning almost two decades, but the overall trend line has been positive for about seven years.”
The Fed survey showed consumers' one-year inflation outlook dropping 0.1 percentage point to 2.5%.
It also showed people are expecting their taxes to go up, after a federal tax bill passed at the end of 2017 favored corporations and the uber-wealthy. The median expectation regarding a year-ahead change in taxes, at current income level, rose to 3%, the highest reading since October 2016.