Posted on Monday, December 27, 2010
By THE ASSOCIATED PRESS
The decline in home prices is accelerating across the nation, according to a new report, and a record number of foreclosures is expected to push prices down further through next year.
But a second report released on Tuesday indicated that consumer confidence in the economy rose in November to the highest level in five months amid some more hopeful signs.
The Standard & Poor’s Case-Shiller 20-city home price index released Tuesday fell 0.7 percent in September from August. Eighteen of the 20 cities recorded price declines.
Cleveland recorded the biggest drop, 3 percent from a month earlier. Prices in San Francisco, Los Angeles and San Diego, which had been showing strength this year, also dropped in September from August.
Washington and Las Vegas were the only metro areas to post gains in monthly prices.
The 20-city index has risen 5.9 percent from its April 2009 bottom. But it remains nearly 28.6 percent below the peak, in July 2006. And home prices have fallen in 15 of the 20 cities in the last year.
Prices rose in many cities from April through July, mostly helped by government tax credits that have since expired.
The national quarterly index, which measures home prices in nine regions of the country, dropped 2 percent in the third quarter from the previous quarter.
In the other report, the Conference Board said that its Consumer Confidence Index for November rose to 54.1 points, up from a revised 49.9 in October. Analysts were expecting 52.0. November’s reading is the highest since June’s 54.3.
The November reading is the highest since June, when the index stood at 54.3 just as the economy’s recovery started to lose momentum. Economists surveyed by Thomson Reuters had expected 52.0.
It takes a level of 90 to indicate a healthy economy, which has not been approached since the recession began in December 2007.
One component of the index, how Americans feel now about the economy, rose to 24, up from 23.5. The other gauge, which measures how American feel about the economy over the next six months, rose to 74.2, up from 67.5 last month.
“Consumer confidence is now at its highest level in five months, a welcome sign as we enter the holiday season,” Lynn Franco, director of the Conference Board Consumer Research Center, said in a statement. “Consumers’ assessment of the current state of the economy and job market, while only slightly better than last month, suggests the economy is still expanding, albeit slowly. Hopefully, the improvement in consumers’ mood will continue in the months ahead.”
Others were less optimistic.
“The rise in consumer confidence in November is not consistent with a sustained acceleration in consumption growth at a time when income growth is weak, the unemployment rate is high and a double dip in house prices is under way,” said Paul Dales, United States economist at Capital Economics.
The consumer confidence index, which measures how respondents feel about business conditions, the job market and the economy over the next six months, has recovered fitfully since hitting a record low of 25.3 in February 2009. Economists watch confidence closely because consumer spending accounts for about 70 percent of economic activity and is crucial to a strong rebound. The improved confidence mirrors an increase in spending in November, fueled by early discounting on holiday goods that lured shoppers into stores.
The Conference Board’s index, based on a random survey mailed to 5,000 households from Nov. 1 to Nov. 19, showed that worries about jobs eased, but that concern remained high.