Renters are so fed up with their homebuying options that they say they'll rent forever

• Renters reported record-low confidence that they'll ever be able to afford a home, per a NY Fed study.
• The market's especially bad for Gen Z and millennials, who are competing with older generations.

Many Americans with ambitions of homeownership might be ready to wave the white flag.

That's according to a new survey by the Federal Reserve Bank of New York, which found that a majority of the 308 renters polled either prefer to rent or are waiting for home prices to come down before considering a mortgage.

The annual survey also found that the confidence renters have that they'll own a home one day fell to record lows, with half of respondents saying the odds were 41% or less. That's the lowest confidence score the Fed has logged since it added housing market sentiment to the survey in 2014.

The Fed study reflects growing pessimism among aspiring homebuyers — especially young homebuyers — as prices have ballooned over the course of the pandemic. More than half of millennials last year said they didn't have enough in savings for a down payment on a home, which is typically 20% of a home's cost, per a December 2021 Clever survey. Millennials and Gen Z, the former of whom were locked out of the housing market for years and the latter of whom are just entering it, are being outbid by older generations, and even Wall Street investors. That's on top of inflation making everything more expensive while the pandemic erodes the savings of Gen Z and millennials more than anyone else's.

"Younger consumers — more so than other groups — expect home prices to rise even further, and they also reported a greater sense of macroeconomic pessimism," Doug Duncan, Fannie Mae's chief economist, said in a February report.

Young renters are losing confidence in their ability to buy homes — even as many still try

The report comes after the pandemic homebuying surge caused the price of real estate to skyrocket; homes are currently the least affordable they've been since the Great Recession.

And renters expect the situation to get more dire as time goes on, according to the NY Fed. They anticipate that rents will rise by 12.8% one year from now, compared to 5.9% a year ago, according to the survey.

Home prices are rising so quickly that the typical American household, which makes about $66,560 per year, would have to set aside 26.3% of their yearly salary to own the average home, with a median home price of $320,000, last quarter, according to Attom analysts. The percentage is up from 21.8% in the first quarter of 2021, the largest annual increase since at least 2005.

And younger adults have less savings to draw from than everyone else. A Bankrate survey from February that surveyed more than 1,000 US adults found that millennials and Gen Z were more likely than other age groups to owe more in credit card debt than what's in their savings.

Even with their pessimism — and the rising prices that fuel it — young adults still have been increasing their home-buying bids in recent years.

According to one recent analysis, investors bought a third of all US homes for sale in the first quarter, the highest in at least a decade. And baby boomers seeking retirement homes are largely beating millennials looking for first homes.

But many millennials are still trying to inch their way in, making up the largest share of homebuyers.

"The sheer size of the millennial population, and the fact that they are just entering peak years for starting families and earning money, means that demand for housing has room to run," Dana Peterson, chief economist at non-profit The Conference Board, told Insider's Hillary's Hoffower in November.