Nov. 26 - Higher home prices and building permits confirm the housing market remains strong- for now. But falling consumer confidence is causing hand-wringing among retailers as they get ready for the busiest time of the year. Bobbi Rebell reports.
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Homes are getting more expensive- and builders are filing for a lot more permits to build new ones.
The S&P/Case Shiller index showed home prices in 20 metropolitan areas had their strongest gain since February of 2006.
Permits for future U.S. home construction hit a near 5-1/2 year high.
That number is key says S&P's David Blitzer:
SOUNDBITE: DAVID BLITZER, MANAGING DIRECTOR AND CHAIRMAN OF THE INDEX FUND, S&P DOW JONES INDICES (ENGLISH) SAYING:
"It suggests that new home sales, new home construction will pick up and that is what really drives GDP. If I buy or sell an existing house the real estate broker gets a fee for all his or her work which is not a big boost to GDP. If somebody builds a new house it creates jobs. It's an investment. It is a substantial boost to GDP. Hopefully that is what we are going to start seeing more of."
But Blitzer also points out that mortgage rates are on the rise, and he believes the pace of that increase in home prices is going to continue to slow.
Consumer confidence is down according to the latest data from the Conference Board- and their economist Ken Goldstein says that could mean trouble for retailers this holiday season.
SOUNDBITE: KEN GOLDSTEIN, ECONOMIST, THE CONFERENCE BOARD (ENGLISH) SAYING:
"Retailers are looking at this and the one thing that they were worried about - they knew this was not going to be a great holiday season but if this is what is happening to sentiment as well as the lack of income growth, then the one thing that they have been trying to avoid and that is to discount as steeply as they did a year ago, two years ago they may not be able to avoid."
The key concerns for consumers, Goldstein says, are the job market- and the lack of pay increases- worries that could weigh on how much consumers spend on Black Friday.
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