* U.S. home prices up 9.3 percent in February year-over-year
* Price gains accelerate in February from January
* Labor costs rise 0.3 percent in first quarter
* Consumer confidence improves in April
By Jason Lange
WASHINGTON, April 30 U.S. home prices rose in
February at their fastest rate in almost seven years, a fresh
sign the housing market recovery will help counter the drag on
the economy from government belt tightening.
The S&P/Case Shiller index of 20 metropolitan areas released
on Tuesday showed single-family home prices rose 9.3 percent in
February from a year earlier.
The data reinforces the view that rising home prices could
make Americans feel better about spending this year, helping
counter a hit to economic growth from tax hikes and government
"This will be a powerful positive fundamental not only for
housing but presumably helpful for consumer spending as well,"
said Stephen Stanley an economist at Pierpont Securities in
Another report showed U.S. consumer confidence rebounded in
April as Americans felt better about the outlook for the economy
and their income prospects.
The Conference Board, a private industry group, said its
index of consumer attitudes rose to 68.1 from a revised 61.9 the
previous month. Economists polled by Reuters had expected a
reading of 60.8.
Still, there appears to be a growing risk that weakness in
the labor market and broader economy could dial down the housing
recovery's strength. Hiring slowed dramatically in March and
economic growth was lackluster in the first quarter, raising
fears the economy could struggle to cope with Washington's
Business activity in the U.S. Midwest unexpectedly
contracted in April to its lowest level since September 2009 as
a gauge of employment pulled back, another report showed.
The Institute for Supply Management-Chicago business
barometer fell to 49, below the 50 mark that denotes contraction
and falling short of economists' expectations for 52.5.
Other recent data has pointed to less steam building in the
housing market, and the Commerce Department said on Tuesday that
the U.S. home ownership rate slipped to 65.2 percent in the
first quarter, a 17-year low.
Still, rising home prices could give construction firms more
incentive to build new homes and increase inventories. A dearth
of homes on the market has held back sales.
The S&P/Case Shiller index showed prices gained 1.2 percent
in February on a seasonally adjusted basis from January, topping
forecasts for a 0.9 percent gain.
Following a spectacular collapse that fueled the 2007-09
recession, the housing sector appears to have turned a corner
and prices have been rising since February 2012.
MORE MONETARY STIMULUS AHEAD
U.S. stocks were about flat, although market players said
the drop in Midwestern business activity weighed on sentiment.
Yields on U.S. government debt were also little changed.
The data came as the Federal Reserve prepared to open a
two-day meeting on monetary policy. A recent slew of weak U.S.
growth data has raised expectations the Fed will keep its pace
of bond buying at $85 billion a month throughout the year.
The Fed has kept overnight interest rates near zero since
late 2008 and it has tripled its balance sheet to about $3
trillion through purchases of securities, which are aimed at
pushing longer-term borrowing costs lower.
A separate report showed U.S. labor costs rose a modest 0.3
percent in the first quarter, pointing to a lack of inflationary
pressures that could give the Fed space to continue its monetary
Wages and salaries, which account for 70 percent of
employment costs, increased 0.5 percent in the first quarter,
and were up 1.6 percent in the 12 months through March,
according to the report from the Labor Department.
Workers' benefits rose 0.1 percent during the quarter, the
slowest pace since 1999. The data may have been distorted by an
error found in benefits data for sales and office workers, but
the department said the data error probably did not have a major