The economy is improving, with the quality of jobs increasing and incomes rising, according to Mark Vitner, Managing Director and Senior Economist at Wells Fargo Securities. Wages are rising by around 3.5 to four percent per year, and Vitner notes that consumer confidence is up, with those numbers at the highest level in 18 years.
“Job growth is stronger, the quality of jobs that are being added is better, and that incomes are rising,” said Vitner. However, he noted that the current housing market has not caught up, and is the economy’s “most troubling” factor.
“The recovery in housing has been very slow to get back on track,” said Vitner in an interview with CNBC. “The numbers are all moving in the right direction, they’re just not moving very quickly.”
“I do think housing will get stronger later this year,” Vitner added.
Data from the First American Real House Price Index shows that home price increases have indeed slowed down. In some cases, home price appreciation has slowed to the point where interest rate appreciation is outpacing it. According to CoreLogic, while the U.S. median sale price has risen by almost 7 percent over the past year, the principal-and-interest mortgage payment has risen by 14 percent, rising twice as fast as prices. However, this does not necessarily mean we are headed for another recession.
“The low inventory, combined with income and employment growth, tighter mortgage underwriting, and strong economic fundamentals, fuels price appreciation that is very different than the price appreciation during the housing boom that peaked in 2006,” said First American Chief Economist Mark Fleming. “Today, house prices are rising because of a lack of supply of homes for sale, near record-low mortgage rates and the strong underlying economic fundamentals of the second longest expansion in U.S. history.”
Watch the CNBC interview with Mark Vitner here.