U.S. household net worth climbs $1.5 trillion in 1st quarter

By Steve Goldstein

WASHINGTON (MarketWatch) — Thanks to rising house prices and a growing stock market, U.S. households and nonprofits added $1.5 trillion in net worth in the first quarter, according to Federal Reserve data released Thursday.

The data was part of a voluminous report called the “financial accounts of the United States,” which contains details on an array of assets and liabilities. The gain in net worth to $81.76 trillion was driven by a $758 billion increase in the value of residential real estate and a $361 billion rise in corporate equities.

Though housing activity has remained muted, prices have grown, allowing many homeowners to escape a situation where their mortgage was greater than what their house was worth. Separate data released by CoreLogic show the number of properties that are underwater has dropped by about half since 2009.
Collectively, households now have 53.6% of the equity in residential real estate — way up from a low of 38.4% in 2009.
Debt outside the financial sector rose at a seasonally adjusted rate of 5% in the first quarter, a slight deceleration from the 5.2% in the fourth quarter of 2013.
Household debt grew 2%, as the 6.6% gain in consumer credit like car and student loans offset the 0.9% drop in mortgage debt. Mortgage debt has dropped 15 of the last 17 quarters, a drop of 13% from six years ago.
The part of the economy that can take advantage of low interest rates, the corporate sector, continued to borrow, with nonfinancial business debt climbing at an annual rate of 7.3%. The Fed said most of that borrowing came through the bond market.
After four quarters of increases, companies began to deploy the cash on their balance sheet, which fell to $1.85 trillion from $1.94 trillion in the fourth quarter.
Steve Goldstein is MarketWatch's Washington bureau chief. Follow him on Twitter @MKTWgoldstein.