Economy Watch: New Home Sales Up in August; Household Net Worth Hits New Record; Durable Goods Orders Up on Car Sales
- Sep 26, 2013
The Census Bureau and HUD reported on Wednesday that sales of new single-family houses in August 2013 were at an annualized rate of 421,000 units.That’s 7.9 percent higher than the revised July rate of 390,000 units and is 12.6 percent above the August 2012 total.
Though there’s been some recovery in new home sales since the worst of the recession, historically speaking the current sales rate is still low. Even 50 years ago, when the government began tracking this particular metric, sales were generally between 500,000 and 600,000 units per year – in a country with a considerably smaller overall population. From the 1970s to the ’90s, except for short periods of downtown, the total ranged roughly from 600,000 to 800,000 each year.
The agencies also reported that the median sales price of new houses sold in August 2013 was $254,600, with an average sales price was $318,900. The estimate of new houses for sale (inventory) at the end of August was 175,000, which represents a supply of five months at the current sales rate. A house is considered for sale by the government when a permit to build has been issued in permit-issuing places or work has begun on the footings or foundation in nonpermit areas, and a sales contract has not been signed nor a deposit accepted.
Household Net Worth Hits New Record
The Federal Reserve reported on Wednesday that U.S. household net worth increased during the second quarter of 2013 compared to the first quarter, and is at a new record in nominal terms (but not as a percentage of GDP). Net worth last peaked at $69 trillion in third quarter of 2007, and then fell to $55.6 trillion by the first quarter of 2009, for a loss of $13.4 trillion. Now household net worth is at $74.8 trillion (up $19.2 trillion from the trough in early 2009), with much of the increase because of appreciate in the equities markets, but some because of housing appreciation.
The central bank also estimates that the total value of household real estate increased to $18.6 trillion in the second quarter of 2013. That’s an improvement, but still about $4 trillion below the all-time record, which occurred during early 2006, just as the housing bubble was maxing out.
Mortgage debt dropped by $41.8 billion in the second quarter of 2013, the Fed said. All together, since the peak of that metric in the late 2000s, mortgage debt has declined by $1.32 trillion. Some of the drop has been because of foreclosures and short sales, but homeowners have also been paying down some of the debt.
Durable Goods Orders Up on Car Sales
Durable goods orders edged upward 0.1 percent in August compared with July, according to the U.S. Department of the Commerce on Wednesday. Take aircraft out of the equation, and the increase was a healthier 1.5 percent for the month. Much of the increase in core goods (sans aircraft) was because of demand for cars.
Wall Street slumped again on Wednesday, with the Dow Jones Industrial Average down 61.33 points, or 0.4 percent, while the S&P 500 lost 0.27 percent and the Nasdaq was off a scant 0.02 percent.