Home Prices, Consumer Confidence Take Tumbles
Prices tumbled at the fastest rate since the widely followed index was begun in 2000, with all 20 metropolitan areas surveyed posting annual declines for the first time.
The Standard & Poor’s/Case-Shiller home price index of 20 cities fell by 15.3 percent in April versus a year ago, according to Tuesday’s report. Prices nationwide are at levels not seen since August 2004.
“If there is anywhere to look for possible improvement, it would be that the pace of monthly declines has slowed down for most of the markets,” David Blitzer, chairman of the Index Committee at S&P, said in a statement.
The narrower 10-city index declined 16.3 percent in April, its biggest decline in its more than two-decade history.
A report from the Office of Federal Housing Enterprise Oversight said U.S. home prices fell 4.6 percent in April from the same month last year, when the index peaked.
While the government report has shown nationwide price declines, the Case-Shiller index has shown far greater drops because it focuses on larger cities where prices rose further during the boom years, and includes riskier loans.
Las Vegas and Miami continue to post the largest declines, falling 26.8 percent and 26.7 percent, respectively.
The losses reverse some of the largest gains registered during the housing boom, when house prices soared more than 53 percent in Las Vegas and 32 percent in Miami in the 2004-2005 period, according to S&P.
Charlotte, North Carolina and Dallas are the only two markets that have had two consecutive months of price gains.
“It’s going to be a slow process, but the less overblown markets will stabilize first and we’re getting a hint that that’s beginning to happen,” Pierre Ellis, senior economist at Decision Economics, told Reuters. “Ultimately, with a very long lag, the serious bubble markets will settle down, too, but not in a time frame that is meaningful for markets now.”
Meantime, U.S. consumer confidence fell unexpectedly sharply in June, sinking to its lowest level in more than 16 years, according to a private industry group. The Conference Board’s reading of consumers’ expectations also hit an all-time low.
The reading, based on a survey of 5,000 U.S. households, suggests “the economy remains stuck in low gear,” said Lynn Franco, the Conference Board’s director of consumer research.
“I don’t think this can be purged immediately by an election or anything else,” William Hummer, chief economist at Wayne Hummer Investments, told the Associated Press. “I think it’s endemic, deep-rooted and likely to persist.”