Rising Household Net Worth Boosts Economy

Recent data paints a mixed picture of today’s housing market. On the one hand, pending and new home sales both fell in September. On the other, existing-home sales, housing starts, and builders confidence all rebounded. Combined with recent news of economic volatility and slower growth, it may be difficult to figure out where things stand. According to Fannie Mae’s Economic & Strategic Research Group, however, things aren’t as complicated as they may seem. In fact, the group – which releases an updated forecast for the economy and housing market each month – says things are still moving in a positive direction, despite the ups-and-downs found in the latest data. “Despite recent headwinds, which likely will slow economic growth compared to the first half of 2015, we see positive trends for consumer spending and housing heading into the fourth quarter,” Doug Duncan, Fannie Mae’s chief economist, said. “Strong home price gains should help drive an increase in household net worth again in the third quarter, and, combined with low gasoline prices and mortgage rates, should support strong consumer spending throughout the rest of the year.” In other words, the strength of recent price increases has boosted the average American homeowner’s net worth, which should help drive consumer spending and the overall economy through the end of this year. More here.

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