Home equity rises to the highest level since 2002
The value of all U.S. owner-occupied homes increased to a record $26.1 trillion in the first quarter, according to a Federal Reserve report released Thursday known as the Flow of Funds.
That was a gain of 4.3% from a year earlier, the slowest annualized increase since 2012. The collective value of U.S. homes is now 15% higher than the bubble peak reached in 2006. Once that bubble popped, it was a decade before values recovered to the same level.
As home values rose in the first quarter, so did homeowner equity, meaning the worth of a home compared to its mortgage. Americans owned 60.4% of their homes in the first quarter, the highest level of equity since 2002.
Mortgage rates have tumbled more than a percentage point in the last six months as the American economy showed signs of slowing and investors worried about the fallout from trade wars.
Lower mortgage rates support continued gains in home prices, because cheaper financing means people shopping for homes qualify for higher-balance mortgages and can bid more for properties they want.
“Existing home sales have benefited from low mortgage rates and a healthy job market,” Freddie Mac said in its May forecast. “We expect stronger home sales and housing starts in the coming months.”
source: Housing Wire