Economy Watch: Second-Quarter Case-Shiller Indexes Up Across the Board

The S&P/Case-Shiller's National Home Price Index increased by 3.6 percent in the second quarter of 2011, after having fallen 4.1 percent during the first quarter of 2011.

First the good news, and in the housing market, not going down has counted as good news for years now. The S&P/Case-Shiller’s National Home Price Index increased by 3.6 percent in the second quarter of 2011, after having fallen 4.1 percent during the first quarter of 2011. So the index has mostly recovered from its first-quarter pit, but still is down 5.9 percent compared with the second quarter of 2010. Nationally, home prices are back to their early 2003 levels, according to Case-Shiller.

As of June 2011, 19 of the 20 MSAs covered by S&P/Case-Shiller Home Price Indices and both monthly composites were up compared with May. Only the Portland market, which was flat, was the exception to the uptick. Compared with June 2010, all of the MSAs are still down.

“Looking across the cities, eight bottomed in 2009 and have remained above their lows,” noted David M. Blitzer, chairman of the Index Committee at S&P Indices, in a statement. “These include all the California cities plus Dallas, Denver and Washington, D.C., all relatively strong markets. At the other extreme, those which set new lows in 2011 include the four Sunbelt cities—Las Vegas, Miami, Phoenix and Tampa—as well as the weakest of all, Detroit.”

Consumer confidence falls through floor

Next, the bad news. Consumers are lacking in confidence in a big way at the moment, which generally inspires parsimonious behavior among shoppers, which might put a dent in retail sales going forward.

According to the Conference Board, its Consumer Confidence Index, which had improved slightly in July, sank like a stone in August. The index now stands at 44.5 (the happy year 1985 = 100), down from 59.2 in July. The last time the index was so low was during the ill-starred spring of 2009.

“Consumers grew significantly more pessimistic about the short-term outlook,” said Lynn Franco, Director of the Conference Board Consumer Research Center, in a statement. “A contributing factor may have been the debt ceiling discussions, since the decline in confidence was well under way before the S&P downgrade. Consumers’ assessment of current conditions, on the other hand, posted only a modest decline as employment conditions continue to suppress confidence.”

Nevada wants to undo deal with Bank of America on mortgage modifications

Nevada Attorney General Catherine Cortez Masto has asked the U.S. District Court in Reno to undo a settlement agreement with Bank of America under which the bank’s Countrywide home mortgage unit promised to modify mortgages of homeowners in trouble, of which there is no shortage in Nevada. The AG accused the bank of lying like a dog (though in more formal language) about its intension to actually make modifications.

Among other violations of the agreement, Cortez said that the bank dragged its feet on mortgage modifications, foreclosed borrowers who had pending loan modifications, jacked up interest rates and monthly payments as a part of modifications, and generally acted Kafkaesque when it came to demanding an irrationally large amount of documentation for modifications. If the judge dissolves the agreement, Nevada would be free to take the bank to court over its practices.

Wall Street moved little on Tuesday, a fairly rare occurrence in recent weeks. The Dow Jones Industrial Average eked out a gain of 20.7 points, or 0.18 percent, while the S&P 500 was up 0.23 percent and the Nasdaq advanced 0.55 percent.