Residential Price Increases, Revised GDP Numbers, Household Debt

The deceleration of residential prices continues. U.S. real gross domestic product increased at an annualized rate of 3.9 percent in the third quarter of 2014. Aggregate U.S. household debt increased a bit during the third quarter of 2014

The deceleration of residential prices continues apace, according to the latest S&P/Case-Shiller Home Price Indices, which S&P Dow Jones Indices released on Monday. The 10-City Composite gained 4.8 percent year over year in September, down from 5.5 percent in August, while the 20-City Composite gained 4.9 percent year over year, compared to 5.6 percent in August.

Eighteen of the 20 cities reported slower annual gains compared to last month. Las Vegas, which has shown double-digit annual gains, posted an annual increase of 9.1 percent, its first time below 10 percent since October 2012. Miami, on the other hand, continues to impress with another double-digit annual gain of 10.3 percent, making it the only city that currently has a year over year double-digit gain.

For the month, both the 10- and 20-City Composites reported a slight downturn, while the National Index dropped 0.1 percent in September compared with August. Charlotte and Miami led all cities in September with price increases of 0.6 percent, while Atlanta and Washington D.C. offset those gains by reporting decreases of 0.3 percent and 0.4 percent month over month.

Revised GDP Numbers Higher

The Bureau of Economic Analysis reported on Monday that U.S. real gross domestic product increased at an annualized rate of 3.9 percent in the third quarter of 2014. That’s the second estimate by the bureau concerning the third quarter; previously, it estimated an annualized expansion of 3.5 percent. In the second quarter, real U.S. GDP increased at an annualized 4.6 percent.

The increase in real GDP in the third quarter reflected positive contributions from personal consumption expenditures, nonresidential fixed investment, federal government spending, exports, residential fixed investment, and state and local government spending. Those were partly offset by a negative contribution from private inventory investment. Imports, which are a subtraction in the calculation of GDP, decreased.

In the second estimate for the third quarter, private inventory investment decreased less than previously estimated, and both personal consumption expenditures  and nonresidential fixed investment increased more. By contrast, exports increased less than previously estimated.

Household Debt Edges Up in Q3

The Federal Reserve reported that aggregate U.S. household debt increased a bit during the 3rd quarter of 2014, coming in at $11.71 trillion, up by 0.7 percent from the second quarter. Overall household debt still remains 7.6 percent below its third quarter of  2008 peak of $12.68 trillion.

Mortgages, the largest component of household debt, edged up by 0.4 percent. Non-housing debt balances increased by 1.7 percent, boosted by gains in all categories. Auto loan balances increased by $29 billion; student loan balances increased by $8 billion; and credit card balances increased by $11 billion. There were $105 billion in new auto loan originations, the highest volume since the third quarter of 2005.

Wall Street ended the day mixed on Monday, with the Dow Jones Industrial Average off 2.96 points, or a scant 0.02 percent, and the S&P 500 down 0.12 percent. The Nasdaq eked out a 0.07 percent gain.