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46 | Th e M Rep o RT o r i g i nat i o n s e r v i c i n g a na ly t i c s s e c o n da r y M a r k e t ANALYTICS The LaTesT More Potholes for Housing recovery A closer look at recent statistics may explain the stagnation many housing markets are experiencing. W hile home sales prices posted moderate gains in September, the housing market recovery as a whole is moving slowly, according to the Wells Fargo Economics Group. In a Housing Wrap Up report released last month, the bank's economists pointed out that new home sales increased by only 0.2 percent month-over-month in September after shooting up by more than 15 percent in August. And while new home sales have increased by 22.6 percent since September of last year, that percentage is perhaps more a reflection of the exception- ally weak sales numbers posted in September 2013, according to Wells Fargo. Existing-home sales climbed by 2.4 percent from August to September, the biggest jump in 11 months. Year-over- year, existing home sales were 1.9 percent higher in September. The median price of new homes dropped sharply in September, according to Wells Fargo, declining by 9.7 percent month-over-month and 4 percent year-over-year, indicating that more discounts are being offered by builders to move inventory. September declines in the median and average sales prices of exist- ing homes were reported by the National Association of Realtors, indicating that more sellers are also offering homes at a discount. Homeownership rates tumbled to 64.4 percent in Q 3, hitting their lowest point since 1995, Wells Fargo's economist noted. Their report attributes the low homeownership rate to a decline in market discipline that was a longtime hallmark of the housing industry—first-time homebuyers made sacrifices to save for a down payment and therefore had a greater stake in buying a home. The market shifted and discipline relaxed, resulting in the sales of many homes with little or no down payment and poor outcomes for buyers. The report said many would-be buyers "now remain chagrined to the point that they are unlikely to buy a home anytime soon." Among individuals under age 35, homeownership rates stood at just 36 percent in Q 3, down 7.6 percentage points since peaking 10 years ago. While many point to the low homeownership rate among millennials as the reason for the slow housing recovery, Wells Fargo does not believe the younger generation is completely to blame. "We believe the missing link in the housing recovery is the lack of strong job growth," the report stated. "While overall employment has surpassed its pre-recession level, much of the rebound in employment has been in part-time jobs." Wells Fargo's economic team found that although there are 1.1 million more people working in the United States than there were prior to the recession, the gains have come strictly in part-time jobs, where 3.7 million more people are now working. The report explained that there are actually 2.6 million fewer people working in full-time jobs than prior to the recession, and "the 2.6 million worker gap from pre-recession employment levels likely explains a great deal of the slow motion recovery in the housing market" since people working full-time are more likely to buy a house than those working part-time, according to the Wells Fargo Economics Group.