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TH E M R EP O RT | 51 O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST DATA The Costs of Keeping Up with Housing Demand The Census Bureau released its Construction Spending Report revealing the data for August 2017. T he Census Bureau released its October Construction Spend- ing Report revealing the data for August 2017. Estimated at a seasonally adjusted annual rate of $1,218.3 billion, construction spending was up 0.5 percent above July's revised estimate of $1,189.1 billion. According to the release, the first eight months of 2017 had 4.7 percent more construction spending than the same period in 2016, from $769.9 billion to $806.2 billion in 2017. Of the $1,218.3 billion in total spending, $954.8 billion was spent in private construction, which is up 0.4 percent from the July esti - mate of $950.5 billion. Residential construction was also up 0.4 percent in August 2017 from an estimated $518.6 billion in July to $520.9 billion in August. Concerning how Hurricanes Harvey and Irma affected the construction numbers, the Census Bureau said though data on total construction spending is only avail - able on a national level, the annual estimates of private nonresidential construction spending by state show Florida and Texas together represented approximately 22 per - cent of U.S. private nonresidential construction spending in 2016. "Response to the Construction Progress Reporting Surveys for August data from the jurisdictions affected by both hurricanes was not significantly lower than nor - mal," the Census Bureau reported. "Hurricane Harvey impacted con- struction activity in Texas only for the last week of the month and Hurricane Irma did not have an impact until September." The bureau said completely re - built projects of structures that have been destroyed by the hurricanes will be included in construction spending figures, but money spent on demolition and cleanup will be excluded. However, for single- family residential construction, 100 percent rebuilds will be counted if the permits are issued as new construction by the permit office. "However, most damaged homes are not completely rebuilt, but are considered repairs, which are not included in these statis - tics," the bureau said. Zillow Chief Economist: Stop Sugarcoating Housing Data According to Svenja Gudell, the U.S. is severely underproducing housing. N ational home sales are falling, and according to Zillow Chief Econo- mist Svenja Gudell, the housing industry needs to stop sugarcoating the truth behind the data: the U.S. is severely under- producing housing. According to Gudell's reaction to August new home sales, which fell 560,000 (SAAR), down 3.4 percent from July and 1.2 percent from 2016, housing inventory is stuck at roughly mid-1990s levels despite the fact that the country has grown by more than 60 mil - lion people since that decade. Though buying conditions are great in theory, considering jobs and incomes are increasing, and interest rates are keeping financing costs low, Gudell said a lack of homes available to buy at a reasonable price point is missing from the equation. According to Zillow, the median, seasonally adjusted new home price is $302,100, down 7.5 percent from July and up 0.5 percent from 2016. "We've been hovering roughly at or below the 600,000 annual sales level for more than a year now, when the market could seemingly easily accommodate sales levels of 750,000 or even much more," Gudell said. "While Hurricane Harvey likely held down sales in Texas, its adverse effect on August sales was probably pretty modest at around 6,000 units." Given the South's recent pat - tern of contributing to much of the new construction market, Gudell said it will be interesting to watch how new home con - struction fares in the upcoming months after the hurricanes. "A surge in activity could set the tone for the rest of the country to follow; a lull will only mean the prolonged new home sales slump we've been enduring will con - tinue," Gudell said. Household Debt Dwindles as Home Prices Increase Overall national net worth of households rose by 1.7 percent in Q2 2017. A ccording to the United States Federal Reserve report, overall national net worth of house - holds rose by 1.7 percent, to $1.7 tril- lion in the second quarter of 2017, which has been attributed to con- tinued growth in both the stock market and the housing market. In 2007, household net worth stood at $66,738 billion and dropped over $10,000 billion in 2008 when the housing crisis occurred. Current net worth stands at $96.2 trillion. Equity value increased by $1.1 trillion, and the worth of real estate rose by nearly $600 billion, mostly due to constrained inventory and continually rising home prices. Of the $47.9 trillion of total domestic nonfinancial debt out - standing, $14.9 trillion of that was household debt, and $13.9 billion was nonfinancial business debt. The remaining $19.1 trillion was government debt. Seasonally adjusted, domestic nonfinancial debt rose by 3.8 percent, which is an increase of 1.7 percent from the first quarter of this year. Household debt also increased by 3.7 percent, and mortgage debt— minus charge-offs—increased at an annual rate of 2.8 percent. The federal level debt increased at a seasonal, annual-adjusted rate of 3.6 percent, which is an increase from the first quarter's rate of 2.6 percent. State and local government continued to decline this quarter at a rate of 1.0 percent, which was less than the 3.4 percent decline in Q1 2017.