Home Prices Up for the Month, Down this Year; Consumers Feeling Distorted

According to the S&P home-price indexes released on Tuesday, prices were up in July for the fourth month in a row. Consumers' assessment of current conditions weakened further in September. But investors and Wall Street were chipper on Wednesday.

September 28, 2011
By Dees Stribling, Contributing Editor

Courtesy Flickr Creative Commons user antwerpenR

According to the Standard & Poor’s/Case-Shiller home-price indexes released on Tuesday, U.S. home prices were up in July for the fourth month in a row. Both the 10-city and the 20-city were up 0.9 percent compared with June. Seventeen of the 20 MSAs posted positive monthly increases; Las Vegas and Phoenix were down over the month and Denver was unchanged.

On an annual basis, Detroit and Washington, D.C. were the only two MSAs that posted increases, up 1.2 percent and 0.3 percent respectively. The other 18 MSAs and the 10- and 20- City Composites were down in July 2011 compared with July 2010. After three consecutive double-digit annual declines, Minneapolis improved marginally to a decline of 9.1 percent, which is still the worst of the 20 cities.

“While we have now seen four consecutive months of generally increasing prices, we do know that we are still far from a sustained recovery,” David M. Blitzer, chairman of the Index Committee at S&P Indices, said in an understatement. “Continued increases in home prices through the end of the year and better annual results must materialize before we can confirm a housing market recovery.”

Consumers Very Grumpy Indeed …

The Conference Board’s Consumer Confidence Index, which hit the skids in August, remained on the skids in September, though it did rise slightly. The index now stands at 45.4 (the wondrous year 1985 equals 100), up from 45.2 in August.

Consumers’ assessment of current conditions weakened further in September. Respondents who claimed that business conditions are “good” decreased to 11.7 percent from 14.1 percent, while those claiming business conditions are “bad” remained virtually unchanged at 40.4 percent. Consumers’ appraisal of employment conditions remained fairly glum as well. Those claiming jobs are “hard to get” increased to an even 50 percent from 48.5 percent, while those stating jobs are “plentiful” increased to 5.5 percent from 4.8 percent (and who are these people?).

“The pessimism that shrouded consumers last month has spilled over into September,” Lynn Franco, director of the Conference Board Consumer Research Center,” noted in a statement. “Consumer expectations, which had plummeted in August, posted a marginal gain. However, consumers expressed greater concern about their expected earnings, a sign that does not bode well for spending.”

… but Investors Not Quite as Grumpy

Also published on Tuesday was State Street Investor Confidence Index, which increased slightly as well, from 88.1 in August to 89.9 in September. The North American component was down a point to 85.1, but European and Asian investor confidence offset that drop by rising 5.6 points to 95.7 in Europe and 5.5 points to 100.7 in Asia. A reading of 100 means that investors are neither decreasing nor increasing allocations to risky investments.

Investors might be worried about sovereign debt — and who isn’t these days? — but they are less worried about corporate debt, since corporations on the whole have done fairly well since the Great Recession reared its ugly head. Still, overall readings in the high 80s are only somewhat higher than during the darkest days of 2008, when the low 80s were the norm for investor confidence.

Wall Street was feeling pretty chipper on Tuesday, maybe less worried for now about Greece (things could be different next week, though). The Dow Jones Industrial Average gained 146.83 points, or 1.33 percent, while the S&P 500 was up 1.07 percent and the Nasdaq gained 1.2 percent.