U.S. home prices down in May, but consumer confidence strong

NEW YORK Tue Jul 29, 2014 5:10pm EDT

A vacant home is shown in North Las Vegas, Nevada April 2, 2013.       REUTER/Steve Marcus

A vacant home is shown in North Las Vegas, Nevada April 2, 2013. REUTER/Steve Marcus

Related Topics

NEW YORK (Reuters) - U.S. single-family home prices fell unexpectedly in May, declining for the first time in more than two years in the latest signal of the wobbly state of the housing market.

Still, U.S. consumers remained confident in the broader economic picture, with a key measure of consumer attitudes at its highest since October 2007 and views of the job market the brightest in six years.

The S&P/Case Shiller composite index of 20 metropolitan areas declined 0.3 percent in May on a seasonally adjusted basis, its first fall since January 2012. A Reuters poll of economists forecast a gain of 0.2 percent.

"The slowdown in price appears to be indicative of the weakening in housing activity more generally, particularly after the very slow start to the spring selling season," said Millan Mulraine, deputy chief economist at TD Securities in New York.

"However, while we are not particularly alarmed by the surprising drop in home prices, this report adds to a growing list of housing indicators that are beginning to point in the wrong direction, which could be a early warning signal that all may not be well in this crucial segment of the economy."

Meanwhile, U.S. homeownership rates continue to decline as financially squeezed Americans opt to rent, a separate report from the Commerce Department showed Tuesday. The seasonally adjusted homeownership rate fell to 64.8 percent in the second quarter of 2014 from 65.0 percent in the first quarter, marking the lowest level since the second quarter of 1995.

The U.S. housing market has been struggling for much of 2014, a lull blamed early in the year on harsh winter weather, but softness has persisted into the spring and summer, and many economists now expect housing to drag on economic growth this year.

"Housing has been turning in mixed economic numbers in the last few months," said David Blitzer, chairman of the index committee at S&P Dow Jones Indices, said in a statement.

"Prices and sales of existing homes have shown improvement while construction and sales of new homes continue to lag."

Indeed, data last week showed sales of new homes fell 8.1 percent in June. Measures of new home construction - building permits and housing starts - also fell sharply last month. Sales of previously owned homes, however, rose 2.6 percent in June, but that was down sharply from May.

Investors appeared to focus more on Tuesday's confidence data, with the S&P 500 up 0.25 percent and an index tracking home builders rising as well. The PHLX housing sector index advanced 1 percent.

Bond prices, meanwhile, were generally higher, with the 10-year U.S. Treasury note yield, which moves in the opposite direction to its price, falling to 2.47 percent from 2.49 percent late on Monday.

CONFIDENCE SURGES

The Conference Board, an industry group, said its index of consumer attitudes rose to 90.9 in July, the highest level since October 2007, from an upwardly revised 86.4 the month before. Economists had expected a reading of 85.3, according to a Reuters poll.

The report showed consumers' view of the job market was the strongest since July 2008, when the recession was in its early stages and the full force of the financial crisis had yet to hit.

The Conference Board's "Jobs Hard to Get" index stood at 30.7 in July, unchanged from last month's downwardly revised figure. The related "Jobs Plentiful" index rose to 15.9 from 14.6 in June, marking that measure's highest reading since May 2008.

YEAR-OVER-YEAR HOME PRICE GROWTH SLOWS

Non-seasonally adjusted prices rose 1.1 percent in the 20 cities, compared to an expectation of a 1.5 percent rise.

Prices in the 20 cities rose 9.3 percent year over year, the slowest year-over-year gain since February 2013 and shy of expectations for a 10 percent climb.

The seasonally adjusted 10-city gauge fell 0.3 percent in May versus unchanged in April, while the non-adjusted 10-city index rose 1.1 percent in May compared to a 1 percent gain in April.

Year over year, the 10 city gauge rose 9.4 percent.

(This story has been corrected to show that homeownership rates fell to 64.8 percent from 65.0 percent, not fell to 64.7 percent from 64.8 percent)

(Additional reporting by Tim Ahmann; Editing by Meredith Mazzilli)

FILED UNDER:
We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (16)
ineeditbad wrote:
“The U.S. housing market has been struggling for much of 2014, a lull blamed early in the year on harsh winter weather, but softness has persisted into the spring and summer, and many economists now expect housing to drag on economic growth this year.”

And How Many People BELIEVED the Winter Weather Blames, from our own Government??? Open Your Eyes.

Jul 29, 2014 11:41am EDT  --  Report as abuse
ineeditbad wrote:
“CONFIDENCE SURGES

The Conference Board, an industry group, said its index of consumer attitudes rose to 90.9 in July, the highest level since October 2007, from an upwardly revised 86.4 the month before. Economists had expected a reading of 85.3, according to a Reuters poll.

The report showed consumers’ view of the job market was the strongest since July 2008, when the recession was in its early stages and the full force of the financial crisis had yet to hit.

The Conference Board’s “Jobs Hard to Get” index stood at 30.7 in July, unchanged from last month’s downwardly revised figure. The related “Jobs Plentiful” index rose to 15.9 from 14.6 in June, marking that measure’s highest reading since May 2008.”

https://www.conference-board.org/about/

Who The Heck is the Conference Board??? Use this Link on their Website to “Contact” Them…

https://www.conference-board.org/contact/index.cfm?id=1984

Good Luck with That…

Jul 29, 2014 11:47am EDT  --  Report as abuse
CSParty wrote:
Surprised??? The housing market is suffering because the banks were bailed out and the people who made their payments on time all the time were not. You create an imbalance when you let the banks gamble in housing, bail them out and then allow them to continue stealing from those who never missed a payment. Any bank that was bailed out should have been forced to restructure loans under the existing market, not the previously inflated market. Bailing out the banks and not the people will cause housing issues for several years to come.

Jul 29, 2014 11:50am EDT  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

California state worker Albert Jagow (L) goes over his retirement options with Calpers Retirement Program Specialist JeanAnn Kirkpatrick at the Calpers regional office in Sacramento, California October 21, 2009. Calpers, the largest U.S. public pension fund, manages retirement benefits for more than 1.6 million people, with assets comparable in value to the entire GDP of Israel. The Calpers investment portfolio had a historic drop in value, going from a peak of $250 billion in the fall of 2007 to $167 billion in March 2009, a loss of about a third during that period. It is now around $200 billion. REUTERS/Max Whittaker   (UNITED STATES) - RTXPWOZ

How to get out of debt

Financial adviser Eric Brotman offers strategies for cutting debt from student loans and elder care -- and how to avoid money woes in the first place.  Video 

Recommended Newsletters

Reuters U.S. Top News
A quick-fix on the day's news published with Reuters videos and award-winning news photography and delivered at your choice of one of four times during the day.
Reuters Deals Today
The latest Reuters articles on M&A, IPOs, private equity, hedge funds and regulatory updates delivered to your inbox each day.
Reuters Technology Report
Your daily briefing on the latest tech developments from around the world from Reuters expert tech correspondents.