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Consumers lukewarm about homes in a stalled economy: Fannie Mae

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WASHINGTON (6/11/14)--Consumers continue to doubt that the economy is pointed in the right direction, while stagnant household income appears to be a roadblock for improvements in the housing marketing, according to data from Fannie Mae's May 2014 National Housing Survey ( MarketWatch June 9).

The percentage of people who believe the economy is trending downward remained at 57% last month, according to the survey. And the percentage of those who reported a significantly higher income than last year dropped four points to 21%.

Despite a more positive sentiment about the housing recovery of late, homebuyers and sellers have still largely been vacant from the market for this time of year.

"Consumers' lukewarm income expectations and reticence about the economy seem to be holding back housing demand," said Doug Duncan, Fannie Mae chief economist and senior vice president ( MarketWatch ). "This year's spring and summer home buying season has gotten off to a slow start, even as mortgage rates have trended lower over the past two months."

Duncan added that national housing data reveal that the economy remains the chief concern for consumers who don't believe it's the right time to put their homes on the market.

While the housing market has showed some signs of improvement, 2014 looks like it will fall short of the sales rate achieved last year, Fannie Mae's chief economist said.

Additional survey highlights:
  • Those who believe home prices will rise in the next 12 months fell to 48%, while those who believe home prices will decrease jumped 7%;
     
  • Respondents who believe mortgage rates will increase in the 12 months dropped to 49%;
     
  • Those who believe it's a good time to buy a house fell to 68%, a slight decline, while those who believe it's a good time to sell a house rose to 43%, a new high for the survey;
     
  • Those who say the economy is improving increased 3% from last month to 38%; and
     
  • Those who expect their personal financial situation to get better over the next year fell slightly to 42%.

Jobs number grows, quality in question

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WASHINGTON (6/11/14)--Though the U.S. economy has just about recouped all the jobs it lost after the economic downturn, questions remain about the quality of the jobs that have been returned.

About 138.46 million citizens were employed last month, according to numbers released by the Labor Department last week, just edging out the 138.37 million Americans who were employed in January 2008, the most ever ( MarketWatch June 10).

But in addition to the fact that the percentage of people who have jobs has fallen nearly 5% since 2008, it may also be concerning to learn just what types of jobs have been brought back in recent years.

According to Labor Department numbers, it seems as if the economy is replacing high-paying jobs with low-paying jobs, as the average wage has dropped to $24.38 an hour.

Manufacturing and construction jobs, which boast above-average pay scales, have fallen by 2.3% since 2008, while other high-paying jobs such as those in wholesale trade, the financial sector, government and information services have also fallen short of returning to pre-recession levels, according to MarketWatch.

All told, the United States offers 4 million fewer well-paying jobs than it did in January 2008.

Industries that have seen rising job numbers in recent years were health care, food preparation, white-collar professional and business services, and education.

While some of these industries can offer high pay, Labor Department numbers show that the economy has failed to add 3 million of these types of jobs that pay more than the average hourly wage.