Home Prices Bounce Along the Bottom (Maybe)
- Oct 26, 2011
According to the latest S&P/Case-Shiller Home Price Indexes, which were released on Tuesday, U.S. residential prices are essentially flat. Both the 10-city and the 20-city composite indexes upticked 0.2 percent month-over-month between July and August of this year. But as many headline writers were quick to point out (because it’s a grabby stat), year-over-year the indexes were down: 3.5 percent for the 10-city composite, 3.8 percent for the 20-city composite.
At a 8.5 percent annual loss, Minneapolis posted the steepest year-over-year drop in August, but has improved in each of the last three months. Detroit and Washington DC were the only two cities to post positive annual returns: up 2.7 percent and 0.3 percent, respectively.
Still, even the annual numbers weren’t quite as bad as they seemed, according to David M. Blitzer, chairman of the Index Committee at S&P Indices. “In the August data, the good news is continued improvement in the annual rates of change in home prices,” he asserted in a statement. “With 16 of 20 cities and both composites seeing their annual rates of change improve in August, we see a modest glimmer of hope with these data.”
For its part, the Federal Housing Finance Agency reported that prices for houses whose mortgages are owned or guaranteed by the GSEs were down 4 percent year-over-year. Between July and August, the drop was 0.1 percent. Declining more than other regions were parts of the West, including Colorado, Arizona and California.
Consumers feel like the recession never went away
Consumers don’t see any glimmers of hope right now, modest or otherwise, if the latest Conference Board Consumer Confidence Index, released on Tuesday, is any indication. The index, which had improved slightly in September, declined in October. It now stands at 39.8 (the wonder year 1985 = 100), down from 46.4 in September.
Consumers’ appraisal of present-day conditions declined in October, with respondents who asserted that business conditions are “bad” increasing to 43.7 percent from 40.5 percent, while those claiming business conditions are “good” decreased to 11 percent from 12.1 percent. Those claiming jobs are “plentiful” decreased to 3.4 percent from 5.6 percent (and who are these people and what do they do?). On the other hand, those saying jobs are “hard to get” also decreased, from 49.4 percent to 47.1 percent.
“Consumer confidence is now back to levels last seen during the 2008-2009 recession,” Lynn Franco, director of the Conference Board Consumer Research Center, said in a fairly glum statement. “Consumer expectations, which had improved in September, gave back all of the gain and then some, as concerns about business conditions, the labor market and income prospects increased. Consumers’ assessment of present-day conditions did not fare any better.”
Wall Street decided on Tuesday that some ill winds are blowing from Europe—word is that Italy has drafted some economic reform proposals on a cocktail napkin, apparently, which it will offer to the rest of the EU on Wednesday. So investors rushed to sell. The Dow Jones Industrial Average lost 207 points, or 1.74 percent, while the S&P 500 was down 2 percent and the Nasdaq declined 2.26 percent.