Economy Watch: Home Prices Rise, but Consumer Confidence Slips
By Dees Stribling, Contributing Editor
The latest S&P/Case-Shiller Home Price Indices, which were released on Tuesday, showed that on average home prices increased 1.3 percent in April for both the 10- and 20-City Composites. The uptick comes after seven consecutive months of falling home prices as measured by both indices.
On a monthly basis, 19 of the 20 Metropolitan Statistical Areas and both composites rose in April. Only Detroit experienced a decline, as prices there fell 3.6 percent. On an annual basis, however, the indices are still trending negative, if less so than in recent months. April’s data indicate that year-over-year home prices fell 2.2 percent for the 10-city composite and 1.9 percent for the 20-city composite.
With April 2012 data, we finally saw some rising home prices, David M. Blitzer, chairman of the Index Committee at S&P Indices, noted. “While one month does not make a trend, particularly during seasonally strong buying months, the combination of rising positive monthly index levels and improving annual returns is a good sign.”
Consumers Feeling the Blues
Housing might at last be seeing an uptick, but U.S. consumers still aren’t feeling particularly optimistic going into summer. The Conference Board reported on Tuesday that its Consumer Confidence Index, which had declined in May, fell again in June. The Index now stands at 62.0, compared with the baseline score of 100 set in the relatively robust year of 1985. That marks a decline from 64.4 in May.
Consumers who claimed that business conditions are “good” increased to 14.9 percent from 13.6 percent, while those saying business conditions are “bad” increased to 35.1 percent from 34.7 percent. Consumers’ appraisal of the job market was mixed. Those stating that jobs are “hard to get” increased to 41.5 percent from 40.9 percent, while those claiming jobs are “plentiful” increased to 7.8 percent from 7.5 percent.
“Consumer Confidence declined in June, the fourth consecutive moderate decline,” explained Conference Board economist Lynn Franco. “Consumers were somewhat more positive about current conditions, but slightly more pessimistic about the short-term outlook.”
Investors Unimpressed by Euro Summit Prospects
The supposed big-deal euro-zone summit is around the corner, but investors don’t seem especially impressed by its chances of making significant headway. On Tuesday, Spain sold a little over 3 billion euros’ ($3.85 billion) worth of three-month notes, and the yield was 2.362 percent. The last such auction featured a yield of 0.846 percent. Italian short-term debt was up on Tuesday as well.
U.S. debt, on the other hand, continues to see low yields as investors park money in a perceived safe haven, and last summer’s Congressional jousting over the debt ceiling fades from memory. On Tuesday, the U.S. sold a spot of two-year notes ($35 billion worth) and the yield was 0.313 percent. Not quite the record low of 0.222 percent recorded after the debt ceiling was raised last summer, but edging in that direction.
On Tuesday Wall Street seemed a bit more gladdened by the housing numbers than fretful about Europe’s woes, with the Dow Jones Industrial Average gaining 32.01 points, or 0.26 percent. The S&P 500 was up 0.48 percent and the Nasdaq gained 0.63 percent.