House prices stall, consumer confidence up

From Yahoo! Finance

By Burton Frierson

NEW YORK (Reuters) – U.S. consumer confidence rose to a three-month high in December, while prices in the hard-hit housing sector stalled in October, breaking a five-month string of gains.

The consumer confidence reading released on Tuesday reinforced views that the economy is gradually recovering, and the October housing data from the widely watched Standard & Poor’s/Case-Shiller indexes was seen as indicating the market is stabilizing.

The Conference Board, an industry group, said its index of consumer attitudes rose to a reading of 52.9 in December from a revised 50.6 in November as job market pessimism eased and consumers’ expectations reached a two-year high.

“There were some small signs of weakness, but all in all, it’s a better number. It continues the trend of the U.S. economy improving,” said Camilla Sutton, senior currency strategist, Scotia Capital in Toronto

Despite some signs of optimism, consumers in December rated their present situation the worst since February 1983, according to the Conference Board. The U.S. economy has been struggling to rebound from the worst recession in decades.

On Wall Street, the Dow Jones (DJI:^DJI – News) and broad Standard & Poor’s 500 index (^SPX – News) edged higher. Government bonds, which usually perform better in weak economic times, were slightly higher on the day ahead of another auction of government debt.


The consumer confidence index beat analysts’ forecast of 52.5, which was based on a Reuters poll that ranged from 46.0 to 57.0. Last month’s reading was also revised higher from an originally reported 49.5.

The expectations index rose to 75.6 — the highest since December 2007 — from 70.3 in November.

Consumers’ labor market assessment also showed some signs of improvement, with the “jobs hard to get” index decreasing to 48.6 from 49.2.

Consumers rated their present situation the worst since February 1983, with that index falling to 18.8 from 21.2.

The “jobs plentiful” index also fell, dropping to 2.9 — also its lowest since February 1983 — from 3.1.

In housing, the S&P composite index of home prices in 20 metropolitan areas was flat in October, falling short of expectations for a rise of 0.2 percent according to a Reuters survey. September’s index was revised upward to a gain of 0.4 percent, from a previously reported 0.3 percent.

Only seven of the 20 cities in the composite index had month-over-month gains in prices in October, S&P said.

A sustained upturn in home prices is seen vital in the fledgling rebound in the hardest hit housing market since the Great Depression. There has been growing concern that record-high levels of foreclosures will mount even further and depress prices anew.

“The report signals that we have a growing stabilization in house prices. Obviously it’s at a very slow pace and that is because the market is still saddled with a significant amount of inventory,” said Anna Piretti, senior U.S. economist at BNP Paribas.

“We’re likely to see some negative cross currents come into home prices in November, but that doesn’t really change the trend — the trend should be toward stabilization.”

S&P said the annual rate of price declines improved, with the 20-city index dropping 7.3 percent from a downwardly revised 9.3 percent in September. A 7.2 percent downturn was forecast in the Reuters survey.

All 20 metropolitan areas and both the 20-city and 10-city indexes showed smaller rates of decline in October compared with September.

(Additional reporting by Lynn Adler, Emily Flitter and Steven C. Johnson; Editing by Leslie Adler)

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