Economy Watch: Residential Price Increase Still Strong; Homeownership Slightly Up in 3Q
- Nov 06, 2013
CoreLogic reported on Tuesday that home prices nationwide, including distressed sales, increased 12 percent on a year-over-year basis in September. This change represents the 19th consecutive monthly year-over-year increase in home prices nationally, according to the company. On a monthly basis, including distressed sales, home prices increased by 0.2 percent in September compared to August.
Taking distressed sales out of the equation, notes CoreLogic, and home prices increased year over year by 10.8 percent in September. Month over month, excluding distressed sales, residential prices increased 0.3 percent in September compared to August. The company counts both short sales and REO transactions as distressed sales, which in recent years have progressively become less and less a factor in most markets.
CoreLogic’s House Price Index, for which the year 2000 = 100, has been hovering below 150 since the end of the recession, though lately it’s been higher than 150. The bubble peak for the index was in 2006, when it briefly touched 200.
Homeownership Up Slightly in 3Q
The Census Bureau reported on Tuesday that the U.S. homeownership rate came in at 65.3 percent of households in the third quarter of 2013, its lowest 3Q level since the mid-1990s, up still up from the previous two quarters. During the first two quarters of this year, the rate remained at 65 percent; in the third quarter of 2012, the rate was 65.5 percent of households.
At the height of the housing bubble in 2006, 69.2 percent of all households owned their homes, but that number proved unsustainable in the face of the contraction of the housing market, the subprime meltdown, and the Great Recession. In the post-recession era of tighter lending standards and fewer middle-class jobs, that peak will probably not be reached again soon, if ever.
The demographics of employment is also a factor in holding down the rate of homeownership. Younger workers have suffered more unemployment than their middle-aged counterparts in recent years, and thus have less money to put into home buying and no equity to turn to for a downpayment. According to the Census Bureau, 63 percent of adults 18 to 31 had jobs in 2012. In 2007, before the recession, 70 percent that age group was employed.
Wall Street had a mild mixed day on Tuesday after starting out a lot lower, with the Dow Jones Industrial Average off 20.9 points, or 0.13 percent, and the S&P 500 down 0.28 percent. The Nasdaq managed to eke out a gain of 0.08 percent.