Increases in home prices and the stock market pushed household wealth to nearly $85 trillion for the first quarter of 2015, according to the Federal Reserve’s statistical release titled “Financial Accounts of the United States” released Thursday.
The net worth of households and nonprofits rose increased by $1.63 trillion to $84.9 trillion during the first quarter of 2015. Meanwhile, the value of directly and indirectly held corporate equities increased $487 billion and home values rose $503 billion.
Stocks and pension-fund holdings values increased by $1.07 trillion in the first quarter among Americans and non-profit groups, the Fed report says. The Standard & Poor’s 500 Index experienced an increase of 0.4 percent for the first quarter. The index is already up 1.8 percent to begin the second quarter as of yesterday.
Household real estate assets increased by $472.5 billion, according to the data. While owners’ equity as a share of total household real estate holdings increased to 55.6 percent last quarter.
Americans appear to be keeping borrowing to a minimum and evading debt as the report noted that household borrowing was at its lowest rate since the end of 2013. Household debt increased at an annual rate of 2.2 percent in the first quarter of 2015 totaling $13.6 trillion.
Recent mortgage rate and home price increases have many Americans saving the wealth for themselves and being cautious of an ever-changing housing market.
In response to the positive Bureau of Labor Statistics (BLS) employment data released on Monday, the 30-year fixed-rate mortgage rose above four percent this week for the first time since November 2014. Freddie Mac’s Primary Mortgage Market Survey (PMMS), revealed today that the average fixed mortgage rates averaged 4.02 percent for the week ending June 11, 2015.
"Mortgage rates rose above 4 percent for the first time since November 2014 as Treasury yields surged,” said Len Kiefer, deputy chief economist at Freddie Mac. “Markets are responding to strong employment data. In May, the U.S. economy added 280,000 jobs. Moreover, job openings surged to 5.4 million in April, up over 20 percent from a year ago."
Last week, CoreLogic, Inc. released its April 2015 Home Price Index (HPI), which showed that home prices nationwide, including distressed sales, increased by 6.8 percent in April 2015 compared with April 2014. Month-to-month home prices also increased by 2.3 percent compared with March 2015.
These rises will mark 38 months of consecutive year-over-year increases in home prices nationally, according to the index. Home prices increased by 2.7 percent from last year, and 30 states plus the District of Columbia were at or within 10 percent of their peak prices in April.
"Old fashion supply and demand, fueled by historically low mortgage rates and improving consumer finances and confidence, continue to push home prices up," said Anand Nallathambi, president and CEO of CoreLogic. "We expect continued price appreciation throughout 2015 and into next year. Over the longer term, household formation, up by more than one million over the past year alone, will drive down vacancy rates and create tighter housing markets in many metropolitan areas. This should provide the necessary underpinning for rising prices for the foreseeable future.
Click here to view the Federal Reserve's Statistical Release.