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May 30, 2012, 01.12 PM IST
US home prices edged higher for the second month in a row in March, suggesting prices are stabilizing as the housing recovery gains momentum.
But consumer confidence cooled in May to its lowest level in four months, separate data showed on Tuesday, as Americans turned gloomy about the job market and economic outlook.
The closely watched S&P/Case Shiller composite home price index of 20 metropolitan areas gained 0.1% in March on a seasonally adjusted basis, though it fell shy of economists' forecasts for a gain of 0.2%.
The housing market has been a thorn in the side of the broader economic recovery, but the sector has been gaining traction with new construction and sales rising in April.
"In my mind there is no question that housing has bottomed, in terms of home sales, home construction and home prices, but the recovery is still going to be very modest or very sluggish," said Mark Vitner, senior economist at Wells Fargo Securities in Charlotte, North Carolina.
Prices in the 20 cities fell 2.6% from a year ago, an improvement from the 3.5% yearly decline seen last month. Seven of the 20 cities saw price increases from a year ago, including hard-hit Detroit and Phoenix.
Still, it was too early to say housing prices have turned, despite the improvement in some regions, David Blitzer, chairman of the index committee at S&P Indexes, said in a statement.
"This is what we need for a sustained recovery; monthly increases coupled with improving annual rates of change," said Blitzer.
"Once we see this on a broader level we will be able to say the market has turned around."
The major house price indexes ended the first quarter at new post-financial crisis lows, the report said. For the first quarter, prices were down 2%, compared to a 3.9% decline in the last three months of 2011.
Financial markets saw little initial reaction to the data. Wall Street was up more than 1% in mid-morning trading on hopes China may unleash more spending measures and as Greek election polls pointed to support for pro-bailout parties.
A report from industry group the Conference Board showed consumer confidence fell to its lowest level since the start of the year, making for the third month of declines.
The index of consumer attitudes fell to 64.9 from a downwardly revised 68.7 the month before, short of expectations for a gain to 70.0.
"I would expect confidence will remain under pressure as long as negative headlines from Europe persist, which should weigh on confidence in the coming months," said Tom Porcelli, chief U.S. economist at RBC Capital Markets in New York.
"This will call into question the efficacy of the U.S. recovery."
Consumers' view of the labor market soured with 41.0% saying jobs were hard to get, up from 38.1% the month before, while 7.9% said jobs were plentiful, down from 8.4%.
The snapshot of the labor market comes ahead of the comprehensive government figures for May at the end of the week, which are expected to show the economy added 150,000 jobs this month.
The retreat in Americans' assessment of both their present situation and outlook suggests the pace of economic growth in the coming months could moderate, Lynn Franco, director of The Conference Board Consumer Research Center, said in a statement.
But consumers were more upbeat on their income prospects with 15.2% expecting an increase, compared to 13.9% in April.
Purchasing plans also improved and 10.4% said they had plans to buy an automobile within the next six months, up from 9.9% last month. Those anticipating major appliances purchases rose to 45.3% from 44.6.
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