Housing, Renters and US Stock Market
September 22, 2015
Tuesday – September 22
Housing news continues to stream in with mixed results as the sector deals with tightening inventories and rising prices. The Federal Housing Finance Agency reported on Tuesday that home prices were up 0.6% in July from June. In the year ended in July, prices were up nearly 6%. The survey is based on home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac. The data comes after lower than expected results from Existing and New Home Sales in the past week. The index is 1.1% below its March 2007 peak and is roughly the same as the November 2006 index level.
A recent Harvard University study revealed that renters will continue to struggle for the next decade as an estimated 11% more households will fork over at least half of their incomes in rent in 2025. The study said that renters who pay more than half of their earnings in rent often need federal subsidies to find affordable places to live. One big factor for the recent uptick in renting was that many lost their homes during the Great Recession along with incomes declining. The report went on to say that if rents continue to grow faster than incomes, the number of households in hardship could rise as much as 25%.
U.S. Stock markets continue their roller coaster ride due to uncertainty surrounding the Federal Reserve’s future interest rate hikes. Last week, the Federal Reserve held off from raising its benchmark Fed Funds Rate, which is currently at 0.00% – 0.25%. Markets hate uncertainty, and today’s action sees the Dow Jones Industrial Average down well over 200 points. Yesterday, Atlanta Fed President Dennis Lockhart fueled the uncertainty flames when he said a rate hike later this year was still possible and that the Fed, in recent months, has added to the market instability and needs to refine its communication approach.
