KEY MARKET INDICATORS as of Mar 06, 2018
Home Price Appreciation
Home prices continue to rise rapidly around the country in Q4. Nationally, home prices on home purchase loans collected by the Federal Housing Finance Agency (FHFA), increased 6.7% from a year ago. A total of 19 states reported faster growth rates. In the West, home prices in Washington, Idaho, Nevada, Utah, and Idaho all grew at 10% or more in Q4. In the Southeast, home prices saw growth rates between 6 and 9%. Home prices in Texas, California, and Arizona grew between 7 and 9%. At the other end of the market, home prices in Illinois, Mississippi, and Louisiana, North Dakota, and West Virginia are appreciating at a slower pace, reflecting less robust economic conditions in those states.
For the mortgage market, higher home prices means that the average loan size will be larger. As home sales have slowed, larger loan balance is becoming a more important driver for the origination market. Higher home prices also means that homeowners are enjoying a build-up in home equity, making consumers feel wealthier. This wealth effect is pushing consumers to spend more and save less. Consumer spending is growing at 4-5%, while personal savings rate has decreased from 6% of disposable income at the end of 2015 to under-3% at the end of 2017.
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