(Corrects to show homeownership rates fell to 64.8 percent from
65.0 percent, not fell to 64.7 percent from 64.8 percent)
* First drop in home prices since January 2012
* Consumer confidence at highest in nearly 7 years
* Consumer view of job market brightest since 2008
By Chuck Mikolajczak
NEW YORK, July 29 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
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
"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.
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
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
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
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
Year over year, the 10 city gauge rose 9.4 percent.
(Additional reporting by Tim Ahmann; Editing by Meredith