Economy Watch: Home Prices Up During Second Quarter
- Aug 29, 2012
According to the most recent S&P/Case-Shiller report on housing, which was released on Tuesday, U.S. home prices saw positive growth for all three headline composites—national, 20 cities and 10 cities—year-over-year during the second quarter of 2012. That was the first time Case-Shiller has that has happened since the summer of 2010.
The national composite was up 1.2 percent in 2Q12 versus the second quarter of 2011, and was up 6.9 percent versus the first quarter of 2012. The 10- and 20-city composites posted respective annual returns of 0.1 percent and 0.5 percent during 2Q12. Month-over-month, average home prices in the 10-city composite were up 2.2 percent and in the 20-city composite were up 2.3 percent, June versus May.
Prices increased in 18 of the 20 Case-Shiller cities in June (seasonally adjusted), and all 20 cities increased without the seasonal adjustment, with only Charlotte and Dallas dropping in the seasonally adjusted category. The Composite 20 index is off 31.6 percent from its 2006 peak, and up 0.9 percent in June. But the composite masks some wide differences, especially over the long run. For example, prices in Las Vegas are off fully 60 percent from the peak, while prices in Dallas are down only off 6 percent from the peak.
Consumer confidence drops
The Conference Board said on Tuesday that consumers were feeling a bit more blue in August than July. Its Consumer Confidence Index, which had improved in July, declined in August and now stands at 60.6 (1985 = 100), down from 65.4. More specifically, consumers were more apprehensive about the future, since the Expectations Index decreased from 78.4 to 70.5 month-over-month, while the Present Situation Index was virtually unchanged.
Consumers were more apprehensive about business and employment prospects, but more optimistic about their financial prospects despite rising inflation expectations. The percentage of consumers expecting business conditions to improve over the next six months declined to 16.5 percent from 19 percent, while those anticipating business conditions will worsen increased to 17.7 percent from 15.1 percent.
The consumer assessment of the labor market was mixed. Those expecting more jobs in the months ahead decreased to 15.4 percent from 17.6 percent, while those anticipating fewer jobs rose to 23.4 percent from 20.6 percent. The proportion of consumers expecting an increase in their incomes, however, improved from 14.2 percent to 15.7 percent.
Construction jobs disappear in most metro areas
The Associated General Contractors of America reported on Tuesday that construction employment declined in 165 out of 337 U.S major metro areas between July 2011 and July 2012, increased in 123 and was stagnant in 49. “Construction employment is healthy in the handful of areas where private sector demand is on the rebound,” said Ken Simonson, the association’s chief economist, noted in a press statement. “However, construction employment in most metro areas is suffering from the effects of tepid private sector demand and shrinking public sector construction budgets.”
The largest job losses were in Chicago-Joliet-Naperville (down 6,500 jobs, or 5 percent), followed by Tampa-St. Petersburg-Clearwater; Nassau-Suffolk, N.Y.; New Orleans-Metairie-Kenner, La.; and Virginia Beach-Norfolk-Newport News, Va.-N.C. The biggest loser in terms of percentage was Springfield, Mass.-Conn., down 28 percent, or 3,000 jobs.
Bakersfield-Delano, Calif., added the highest percentage of new construction jobs since last summer, up 23 percent, or 3,200 jobs, followed by Yuba City, Calif.; El Centro, Calif.; and Pascagoula, Miss. Los Angeles-Long Beach-Glendale added the most jobs, 7,700, or 7 percent. Other areas adding a large number of jobs included Fort Worth-Arlington, Texas; Phoenix-Mesa-Glendale, Ariz.; Indianapolis-Carmel, Ind.; and Denver.
Wall Street drifted along in a dog-days mode on Tuesday, or maybe just in anticipation of the Fed meeting in Jackson Hole last this week, but in any case the Dow Jones Industrial Average lost 21.68 points, or 0.17 percent, and the S&P 500 was down 0.08 percent. The Nasdaq gained a modest 0.13 percent.