Wednesday, October 27, 2010 - Article by: John A Soricelli Jr - J&J Coastal Lending -
U.S. home prices were weaker in August, according to the S&P Case-Shiller home-price indexes, as effects from the expiration of a government tax credit continued to wear off.
Separately, U.S. consumer confidence improved in October, but remained at historically low levels more than a year after the U.S. economy shifted into recovery, according to a report released Tuesday.
The Case-Shiller index of 10 major metropolitan areas fell 0.1% in August compared with July, while the 20-city index declined 0.2%. Adjusted for seasonal factors, the 10-area index fell 0.2%, while the 20-area declined 0.3%.
Prices had been climbing since April, boosted by the expiration of the government's first-time home-buyer tax credit that lured waves of people to purchase homes before it expired. Growth had slowed in recent months as its effects waned. Before prices had started rising, they had fallen sequentially for six straight months.
David M. Blitzer, chairman of S&P's index committee, called the latest figures "disappointing," noting that prices declined broadly. He added, "17 of the 20 cities and both composites saw a weakening in year-over-year figures, as compared to July, indicating that the housing market continues to bounce along the recent lows."
Compared with a year earlier, unadjusted August prices were 2.6% higher for the index of 10 metro areas, while the 20-city index saw a 1.7% increase.
Month-to-month gainers were headlined by Detroit, which has seen improvement recently after it was battered during the recession, as its prices rose 0.5%. Only five of the 20 cities tracked saw prices increase from July. Decliners on a month-to-month basis were led by Phoenix, which saw prices drop 1.3%, and Dallas, where prices declined 1.1%.
Recent data suggest a standoff between home buyers and sellers may be easing slightly, as the annual rate of sales of previously owned homes climbed 10% in September from a month earlier, according to data released Monday by the National Association of Realtors. Still, historically low mortgage rates haven't been enough to entice would-be home buyers, who are wary of high unemployment and other signs of a soft economy.
Consumer Confidence Improves
The Conference Board, a private research group, said its index of consumer confidence rose to 50.2 this month from last month's revised 48.6 first reported as 48.5.
The October reading was close to the 50.0 expected by economists surveyed by Dow Jones Newswires. The index had reached as high as 62.7 in May.
The present situation index, a gauge of consumers' assessment of current economic conditions, edged up to 23.9 from a revised 23.3 originally reported as 23.1.
Consumer expectations for economic activity over the next six months increased to 67.8 from a revised 65.5 first reported as 65.4.
"Consumers' assessment of the current state of the economy is relatively unchanged, primarily because labor market conditions have yet to significantly improve," says Lynn Franco, director of the Conference Board Consumer Research Center.
Indeed, consumers remain pessimistic about jobs.
A large 46.1% of respondents think jobs are "hard to get" this month, up from 45.8% in September, while only 3.5% of respondent think jobs are "plentiful," down from 3.8% last month.
Expectations about labor markets are equally downbeat. The percentage of consumers expecting more jobs in the months ahead fell to 14.1% from 14.5%, and the proportion expecting fewer jobs stood at 22.0, from 22.6% in September.
Consumers also remain worried about their paychecks. The October report shows only 9.1% of consumers expect their incomes to increase in the next six months, while a larger 15.0% expect a pay cut.
--Kathleen Madigan contributed to this article.
Write to Nathan Becker at nathan.becker@dowjones.com
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