Economy Watch: Home Prices Up For Now
- Jul 28, 2010
July 28, 2010
By Dees Stribling, Contributing Editor
The S&P/Case-Shiller Home Price Index for both the 10 top and 20 top U.S. metro markets registered upticks in May compared with April. The 10-city index was up 1.2 percent and the 20-city index rose 1.3 percent. Compared with last year, the 10- and 20-city indices were up 5.4 percent and the 4.6 percent.
In fact, among the 20 cities tracked by the report, 19 saw month-to-month increases. Only Las Vegas, still the poster-child for the housing bubble, saw a continued erosion of values from April to May, edging down 0.5 percent. Since May 2009, Vegas home values have dropped 6.5 percent, which also happens to be the largest year-over-year decline among the 20 cities, though places such as Charlotte, NC, Chicago, New York, Seattle and Tampa also lost value during the same period as well.
The monthly uptick (except for Vegas) seems like welcome news for a housing industry that’s been battered for a long time, but on the other hand the indices are three-month moving averages, so the May figure reflects a period when sales inspired by the federal homebuyer tax credit were still ongoing. Sales are now down, taking with them the upward pressure on prices inspired by the tax credit.
Consumers Feeling Worse
Consumers are feeling testy this summer, with the Conference Board’s Consumer Confidence Index dropping to 50.4 from a revised reading of 54.3 in June. Companies might be having good quarters in 2010, but that hasn’t been the case for consumers, and they’re voicing their discontent to pollsters.
The Conference Board’s Present Situation Index, which has been in the basement quite a while, dropped to 26.1 from 26.8. The Expectations Index also saw a significant slide, down to 66.6 from 72.7 in June.
The most immediate effect (besides how the stock market seemed to react) will probably be on retailers trying to move back-to-school merch. “Concerns about business conditions and the labor market are casting a dark cloud over consumers that is not likely to lift until the job market improves,” said Lynn Franco, director of the Conference Board Consumer Research Center, in a statement on Monday. “Given consumers’ heightened level of anxiety, along with their pessimistic income outlook and lackluster job growth, retailers are very likely to face a challenging back-to-school season.”
Good News for Apartment Landlords
According to MPF Research in Dallas, the number of occupied U.S. apartments increased by 215,000 during 1H10, at least in the 64 largest metro markets. The company pegged the overall national vacancy rate at 6.6 percent at the end of the first quarter of this year, compared to 8.2 percent at the end of 2009.
What gives? Household formation seems to be on the mend, with some people in their 20s now getting jobs (just not as many as everyone would like). There’s also continued fallout from residential foreclosure, since the foreclosed have to live somewhere, and for-sale housing probably isn’t an option in most cases.
Wall Street bounced around like the needle of a seismograph during an earthquake on Monday, with the end results mixed. The Dow Jones Industrial Average eked out a gain of 12.26 points, 0.12 percent. The S&P 500 and the Nasdaq, on the other hand, were down 0.1 percent and 0.36 percent, respectively.