Home equity is rising, Unemployment at decade lows, Manufacturing in Philadelphia turned positive
August 18, 2016
Thursday – August 18
The percentage of U.S. homeowners who owe more on their mortgage than their homes are worth continues to decline, though the numbers are still above normal levels. Nearly 6 million borrowers owe more on their mortgages than their homes are worth. The negative equity rate fell to 12% of all mortgaged homeowners, down from 14% a year ago, reports online real estate data base company Zillow. In addition, the 12% is well below the 30% seen at the height of the housing crisis. Negative equity has been one of the factors to higher home prices as homeowners in a negative equity state are less likely to sell at a loss, which pushes inventories of homes available for sale lower, and in turn pushes home prices higher for prospective buyers.
The number of Americans applying for first time unemployment benefits hover near multi-decade lows as the labor market continues to improve. Weekly Initial Jobless Claims fell 4,000 in the latest week to 262,000, trending below the 300,000 threshold for 76 consecutive weeks. That is the longest streak since 1973 when the labor market was smaller. The labor market is now viewed as near full employment, though the quality of jobs are suspect, and wage growth has been on the low side.
Manufacturing activity in the Philadelphia region ticked up in August and turned positive for only the third time in 2016. The August Philly Fed Index of manufacturing rose five points to 2.0, above the 0.5 expected. However, several key components of the index did not fare as well. The new orders index declined to -7.2 from the +11.8 in July. In addition, the employment component fell 18 points to to -20, the largest decline in 2016.
