Economy Watch: Home Prices Continue Their Slide

By Dees Stribling, Contributing Editor

The recent modest upticks in residential property sales, at least for existing homes, haven’t translated to price increases in most U.S. housing markets, according to the latest S&P/Case-Shiller Indices, released on Tuesday. In November, in fact, both the 10-city and the 20-city composite indices showed a monthly decline of 1.3 percent. For the second month in a row, 19 of the 20 metro areas covered by the indices also experienced home-price decreases.

Compared with November 2010, the 10- and 20-city composites posted declines of 3.6 percent and 3.7 percent, respectively, in November 2011. In October 2011, the year-over-year drops were 3.2 percent and 3.4 percent, respectively. The indices are now roughly back to their mid-2003 levels.

Atlanta continues to suffer the slings and arrows of outrageous fortune, at least in terms of housing. The market was down 2.5 percent over the month, after having fallen by 5 percent in October, 5.9 percent in September and 2.4 percent in August. Atlanta’s year-over-year change in November was a loss of 11.8 percent in housing value. Compared with the prior month, only a single market registered an increase in November, namely metro Phoenix at 0.6 percent, but the area’s still down 3.6 percent for the year. Only Washington, D.C., and Detroit gained in November 2011 when compared with November 2010, up 0.5 percent and 3.8 percent, respectively.

Consumer confidence takes a dive, too

The Conference Board’s Consumer Confidence Index, which had been going up lately, up to and including December, beat an expected retreat in January. The index now stands at 61.1 (the happy year of 1985 = 100), down from 64.8 in December. The component Present Situation Index took a particularly steep downward dive, from 46.5 to 38.4, while expectations were down only a little, from 77 to 76.2.

There didn’t seem to be any single economic sucker punch that made consumers antsier in January, according to the Conference Board. Those saying that business conditions are currently “good” decreased to 13.3 percent from 16.3 percent, while those asserting that business conditions are “bad” increased to 38.7 percent from 33.5 percent. Those saying jobs are “plentiful” decreased to 6.1 percent from 6.6 percent, while those claiming jobs are “hard to get” increased to 43.5 percent from 41.6 percent.

Consumers’ short-term outlook was slightly weaker than it was last month, but their outlook for the labor market was moderately more favorable. “Regarding the short-term outlook, consumers are more upbeat about employment, but less optimistic about business conditions and their income prospects,” noted Lynn Franco, director of the Conference Board Consumer Research Center, in a press statement. “Recent increases in gasoline prices may have consumers feeling a little less confident this month.”

Unremarkably day on Wall Street, except for golden cross

Wall Street seemed to take the housing numbers—and a weaker-than-expected Chicago Purchasing Manager Index—to heart on Tuesday, with the markets taking a tumble early in the day. By the end, however, they had mostly recovered, with the Dow Jones Industrial Average down 20.81 points, or 0.16 percent, and the S&P 500 off a mere 0.05 percent. The Nasdaq eked out a tiny 0.07 percent gain.

The S&P 500 might have been slightly negative on Tuesday, but at the closing bell it was confirmed that the index had indeed formed a “golden cross.” That term is used to describe a situation in which the 50-day (short-term) moving average rises higher than the 200-day (long-term) moving average. The 50-day averaged ended at 1257.79, while the 200-day average of was a bit less at 1257.19.

Golden crosses have happened only 26 times since 1962. Some analysts don’t think it means prospects for the market are very golden, but others point out that in about four out of five cases of golden crosses in the last 50 years, the S&P 500 was up six months later (it certainly happened the last two times, in July 2009 and October 2010). Golden crosses, in other words, have been harbingers of bull markets much of the time.