Economy Watch: Home Prices at Double Dip?
- Feb 23, 2011
February 23, 2011
By Dees Stribling, Contributing Editor
The latest S&P/Case-Shiller indexes on U.S. housing prices confirm that home valuations are still on the slide. In fact, almost all of the small pricing uptick experienced in 2009, which probably was a result of the long-gone federal homebuyer tax credit, has been erased. A continuing influx of distressed properties put further pressure on prices.
The drop in prices between November and December for the 10-city index was 0.85 percent. Compared with December 2009, the 10-city index was off 1.2 percent. The 20-city index dropped 1 percent month-over-month and 2.4 percent since the same month a year ago.
Separately, CoreLogic is at odds with the National Association of Realtors about the number of houses sold in the United States in recent years. The company is asserting that NAR overstated sales especially as the recession hit full force, up to and including last year. CoreLogic says that existing home sales were down 10.8 percent in 2010 compared with 2009, to 3.3 million, while NAR says that 4.9 million homes sold, down only 5.7 percent from 2009.
That’s a fairly large discrepancy, the product of two different number-crunching methodologies, apparently. Unless one or the other entity revises its estimates or methods, it might be dueling data for a while.
American Confidence Spikes Upward
Despite the news about housing, the Conference Board reported that Americans are now more confident about the economy and their own economic prospects than at any time since before the recession took hold. The organization said on Tuesday that its index of consumer confidence spiked to 70.4 in mid-February from a revised 64.8 in January (100 means the confidence of 1985, a.k.a. Morning in America.)
Consumers’ appraisal of current conditions improved moderately in February, with those calling business conditions “good” increasing to 12.4 percent from 11.3 percent. Those asserting that business conditions are “bad” was unchanged at 39.6 percent. Consumers’ assessment of the labor market was also more positive than in January, with respondents who said that jobs are “hard to get” decreasing to 45.7 percent from 47 percent, while those who said that jobs are “plentiful” rose to 4.9 percent from 4.6 percent.
“Looking ahead, consumers are more positive about the economy and their income prospects, but feel somewhat mixed about employment conditions,” Lynn Franco, director of the Conference Board Consumer Research Center, noted in a statement. “The Consumer Confidence Index is now at a three-year high, due to growing optimism about the short-term future.”
Wal-Mart Has Lackluster Domestic Quarter
Retail colossus Wal-Mart Stores Inc. had a surprise for the markets late last week: same-store U.S. sales were down 1.8 percent during its fiscal fourth quarter 2010 (ending Jan. 31), compared with the same period a year earlier. That compares unfavorably with some other large retailers, which have been reporting strong comps for the quarter. Home Depot, for example, saw an increase of 3.8 percent in its fourth-quarter 2010 same-store sales, while Macy’s scored a 4.3 percent increase year-over-year.
“We are disappointed by Wal-Mart U.S. fourth-quarter sales,” Wal-Mart CEO Mike Duke said in a statement. “Some of the pricing and merchandising issues in Wal-Mart ran deeper than we initially expected, and they require a response that will take time to see results.”
The unrest in Libya and the prospect of oil market disruptions roiled world financial markets on Tuesday, with the Dow Jones Industrial Average dropping by 178.46 points, or 1.44 percent. The S&P 500 and the Nasdaq took it even harder, losing 2.05 percent and 2.74 percent, respectively.