By: Tess Stynes and Kathleen Madigan
Original Post Date: September 28, 2011
U.S. home prices rose for a fourth consecutive month in July but remain down from last year, according to Standard & Poor’s Case-Shiller home-price indexes, as the housing market continues to struggle.
Separate data on consumer sentiment released Tuesday showed just how shaky the economy remains. The Conference Board, a private research group, said its index of consumer confidence barely changed in September, edging up to 45.4 from a dismal 45.2 in August.
Together the two data points, like other recent indicators, suggest the economy is growing, but remains vulnerable to a new shock. Economists said the improvements in both home prices and consumer confidence were too small to suggest a meaningful improvement in the broader economy.
“While we have now seen four consecutive months of generally increasing prices, we do know that we are still far from a sustained recovery,” said David Blitzer, chairman of S&P’s index committee. “Continued increases in home prices through the end of the year and better annual results must materialize before we can confirm a housing market recovery.”
Home prices rose in July from June in 17 of the 20 major U.S. metropolitan markets included in the monthly survey, led by 3.8% growth in Detroit. Las Vegas and Phoenix saw declines of 0.2% and 0.1%, respectively. Denver was unchanged.
However, with the exception of Detroit and Washington, prices were down year-to-year.
Overall, the 20-city index rose 0.9% in July from June. Adjusting for seasonal factors, however, the index was flat. A smaller index of 10 major cities also rose 0.9% from June but fell 0.1% when seasonal factors were included. Year-to-year, unadjusted July prices fell 3.7% for the 10 major markets while the 20-city index was down 4.1%.
Consumer Confidence Still Low
The housing market has been struggling due to high unemployment, foreclosures and tighter mortgage requirements. Home prices rose in April for the first time in eight months, though most of the improvement was believed to reflect the beginning of the spring-summer home-buying season.
The National Association of Realtors last week reported existing home sales in August rose 7.7% from July. Foreclosure sales and “short sales,” where lenders allow homeowners to sell houses for less than the value of existing loans and forgive the difference, accounted for 31% of sales.
Home prices rose in July in 17 of 20 major U.S. metro areas but were down year-to-year. Above, a sign in front of a home in Des Plaines, Ill.
Consumer confidence, meanwhile, fell short even of economists’ muted predictions. The present situation index, a gauge of consumers’ assessment of current economic conditions, fell further to 32.5 from a revised 34.3, originally put at 33.3. The Conference Board’s confidence index, which is on a 100-point scale, hit its most recent peak in February at 72.0.
The present-sentiment index has fallen for five consecutive months, “a sign that the economic environment remains weak,” said Lynn Franco, director of the Conference Board Consumer Research Center.
“Consumers expressed greater concern about their expected earnings,” Ms. Franco said, “a sign that does not bode well for spending.”
Within the survey, only 13.3% of respondents expect their incomes to increase in the next six months, down from 14.3% in August. The vast majority, 68.7%, expect no change, up from 66.9% in August.
The assessment on employment was mixed. The report shows 50.0% of respondents think jobs are “hard to get” in September, up from 48.5% in August. Yet 5.5% think jobs are “plentiful,” up from 4.8% last month.