Fed Says Total U.S. Household Net Worth Rose in 2Q -- Update

By Eric Morath Features Dow Jones Newswires

The total net worth of U.S. households pushed further into record territory, propped up by improving home values and stock prices.

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The net worth of U.S. households and nonprofits, defined as the total of all assets minus all liabilities, rose by $1.7 trillion in the second quarter of 2017 to $96.2 trillion, according to a report Thursday from the Federal Reserve.

The increase was smaller than the $2.3 trillion advance in the first three months of the year, but marked the seventh straight quarter overall wealth rose in the U.S.

Meanwhile, total household liabilities rose by a modest $146 billion to $15.2 trillion. Household liabilities relative to net worth is at the lowest share since 2000, RBC Capital economist Tom Porcelli said.

"The healthy state of the U.S. household balance sheet continues to be one of the key themes underpinning our broad economic view that the current expansion is far from over," he said.

Household wealth in the stock market climbed by $1.1 trillion in the second quarter. While a slightly smaller increase than in the first quarter, the improvement still reflected a steady upward trend in equities prices supported by solid business and consumer confidence and broad economic growth around the globe.

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The value of real estate rose by $564 billion last quarter, a better gain than the prior quarter, showing that home prices are rising at time when demand for housing is high and unemployment is low.

"Nationwide, we're seeing an increase in home values due to chronically low inventory of homes for sale," said Cheryl Young, economist at real estate website Trulia. "Homeowners generally should feel pretty good and that might have some spillover effects in terms of consumer spending."

But Ms. Young said that just more than a third of all homes have recovered their prerecession peak values, so in many cases homeowners may still feel as if they've lost equity.

Thursday's report showed owners' equity in real estate, or values less debt owed on mortgages, was up about 3% to $1.4 trillion in the second quarter.

During the 2007-09 recession, when the housing market and stock market both fell, households lost nearly $12 trillion in wealth. But net worth fully recovered by the second half of 2012, and has risen most quarters since.

The figures are from a quarterly Fed report, known as the Flow of Funds, which tracks the aggregate wealth of all U.S. households and nonprofit organizations. The report provides no details of how that wealth is distributed between households. The figures aren't adjusted for inflation.

Write to Eric Morath at eric.morath@wsj.com

(END) Dow Jones Newswires

September 21, 2017 17:33 ET (21:33 GMT)