Economy Watch: Home Prices Edge Down
- Dec 28, 2011
The housing market still has that sinking feeling, with the latest Standard & Poor’s/Case-Shiller indexes describing downward movements in prices in almost all major U.S. markets in October. Month-over-month, the 20-city index dropped 1.2 percent, with 19 of the 20 metro markets seeing a decline. The 10-city index dropp 1.1 percent for the month of October. Year-over-year in October, the decline was 3.4 percent for the 20-city index and 3 percent for the top 10 housing markets. (These figures aren’t seasonally adjusted, which S&P says are more accurate because the housing bubble disrupted seasonal patterns.)
Still, price declines aren’t that uncommon during the fall, when sales traditionally drop off after the summer selling season. But the monthly declines in the 20-city index this October (down 3.4 percent) and September (down 3.6 percent) are steeper than during “normal” times. It’s possible—though not possible to confirm yet—that an uptick in foreclosures in the fall is pressing prices down once again.
Some markets continue taking harder punches than others, naturally. Atlanta in particular seems vexed by declining home prices, which were down 5 percent in October when compared with September, and 11.7 percent since October 2010. Some markets, including Atlanta, are now seeing prices lower than in January 2000. Other markets in that unfortunate category also include Cleveland, Detroit, Las Vegas and Phoenix. Most markets are still above that level, however. Overall, things are roughly back to where they were in 2003, in terms of housing prices.
Consumer confidence rising
Despite the perpetually sluggish housing market and other troubles, consumer confidence is still on the rise, at least until the next panic. According to the latest report on the subject by the Conference Board, which was released on Tuesday, the organization’s index now stands at 64.5, up from 55.2 in November (a favorite growth year, 1985, equals 100).
Consumers’ assessment of current conditions improved in December, notes the Conference Board. Those saying that business conditions are “good” increased to 16.6 percent from 13.9 percent, while those affirming that business conditions are “bad” declined to 33.9 percent from 38 percent. Consumers’ assessment of the job market was also more positive. Those claiming jobs are “plentiful” increased to 6.7 percent from 5.6 percent, while those claiming jobs are “hard to get” decreased to 41.8 percent from 43 percent.
“After two months of considerable gains, the Consumer Confidence Index is now back to levels seen last spring [April 2011, 66.0],” notes Lynn Franco, director of the Conference Board Consumer Research Center, in a press statement. “While consumers are ending the year in a somewhat more upbeat mood, it is too soon to tell if this is a rebound from earlier declines or a sustainable shift in attitudes.”
Sears to shed stores
U.S. shoppers have spoken, and one of the things they said during the recent holiday seasons is “Sears? What’s a Sears?” That might be an exaggeration, but the retailer, known as Sears Holdings Corp. since the joining of Sears and Kmart in corporate matrimony, admitted on Tuesday (though not in so many words) that its holiday season sales stank, and that its earnings are expected to drop roughly 50 percent in the fourth quarter.
The upshot of the less-than-successful holiday season and other woes, according to Sears, is that 120 or so stores are going to get the ax soon. Exactly which of the retailer’s roughly 4,000 locations will be closed isn’t clear yet, but it is clear that the weak ones of the herd will be culled. Investors weren’t impressed by the news; shares in Sears Holdings dropped over 27 percent on Tuesday.
Wall Street bounced around on Tuesday, but in the end investors couldn’t make up their minds. The Dow Jones Industrial Average lost 2.65 points, or a scant 0.02 percent. The S&P 500 was up an even smaller 0.01 percent, but the Nasdaq gained 0.25 percent.