U.S. Household Net Worth Rises on Higher Stock, Home Values -- Update

03/08/18 12:23 PM EST
By Harriet Torry 

The total net worth of U.S. households rose to nearly $100 trillion during the final quarter of 2017, as buoyant stock markets and rising property prices boosted Americans' wealth.

The increase on the quarter was $2.076 trillion, bringing household net worth to $98.746 trillion, according to data the Federal Reserve released Thursday. That was a larger gain than the revised $1.645 trillion advance in the third quarter of last year.

Household wealth in the stock market climbed by $1.346 trillion in the quarter, reflecting rising equity valuations last quarter amid solid business and consumer confidence and a strong labor market.

American households increased their borrowing in the fourth quarter, although rising asset valuations led to the gain in net worth. Households debts rose at an annual rate of 5.2% in the fourth quarter, with liabilities increasing by $208.6 billion, according to a quarterly Fed report, known as the flow of funds, which tracks the aggregate wealth of all U.S. households and nonprofit organizations. Nonprofits make up a relatively small proportion of household wealth.

The value of households' real estate increased by $511.2 billion, reflecting continuing increases in home prices. U.S. house prices rose 1.6% in the fourth quarter, according to the Federal Housing Finance Agency's house price index, and increased 6.7% on the year.

In addition to the buffer from home equity, households also have $9.272 trillion in deposits, which include checking and savings accounts and certificates of deposit. The report presents its data only in aggregate, providing no details on how assets are distributed among households.

The fourth-quarter wealth gains came as the economy expanded at a 2.5% annual rate during the period.

Household borrowing has continued to climb even though the Fed has been gradually raising short-term interest rates, which make mortgages, home-equity lines and other loans more expensive. The central bank nudged its benchmark interest rate a quarter percentage point higher three times in 2017, to its current range between 1.25% and 1.5%.

Federal government debt decreased 0.2% at a seasonally adjusted annual rate, the report said.

Write to Harriet Torry at harriet.torry@wsj.com


(END) Dow Jones Newswires

March 08, 2018 12:23 ET (17:23 GMT)

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