US Home Prices on the Rise - September 25, 2013
The net worth of U.S. families and nonprofit organizations rose $1.3 trillion in the second quarter as rising home values and gains in the stock market boosted Americans’ balance sheets.
U.S. households’ net worth — the value of homes, stocks and other investments minus debts and other liabilities — climbed 1.8% to $74.82 trillion in the April-to-June period, according to a Federal Reserve report released Wednesday. That is the highest level since records began in 1945, without adjusting for inflation.
The Fed’s quarterly “Financial Accounts of the United States” report, which provides a snapshot of the finances of U.S. households and corporations and the government, provides the latest evidence that Americans are gradually rebuilding their wealth after the recession. Households’ net worth rose about 6% in the first two quarters of 2013, and have likely increased further in the past few months. Stock prices and real-estate values have continued to advance with the Standard & Poor’s 500-stock index up 5% since the end of the second quarter.
The Fed’s figures aren’t adjusted for inflation or population growth. Rising household wealth also masks big differences between the affluent, who tend to own stocks, and the less affluent, who were disproportionately hit by the housing crash since their biggest financial asset tends to be their home. While stocks have been on a multiyear bull run since 2009, home prices, even after recent gains, remain below their prerecession peaks.
Still, the latest numbers show Americans are making progress repairing their balance sheets in the wake of the financial crisis five years ago. The Fed’s figures showed that the value of corporate equities and mutual funds owned by households rose nearly $300 billion, while the value of real estate owned by households climbed about $525 billion. Americans also have more equity in their homes. A measure of owners’ equity in household real estate as a percentage of household real estate holdings hit 49.8% from 48.1% a quarter earlier.
Americans’ willingness to borrow also is increasing. Overall borrowing by households grew at an annualized rate of 0.2% in the second quarter, after shrinking 0.5% in the first quarter–slightly less than previously estimated. Mortgage borrowing fell 1.7%, less than in the first quarter, while other types of consumer borrowing, such as student and auto loans, expanded 5.6%.
The Fed’s net-worth figures were generally revised higher going back to 1945
to account for changes in how the government measures pension-fund holdings.
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