NEW YORK – Sept. 30, 2009 – Home prices rose for the third-consecutive month in July, bolstering the view that the long free fall in the housing market may be history. But consumer confidence fell unexpectedly, modestly pushing down stocks.
Housing prices ticked up 1.6 percent from June, according to the Standard & Poor’s/Case-Shiller home price index, which tracks 20 large cities. Low mortgage rates and bargains on foreclosed homes are attracting buyers.
Home prices rose for the first time in three years in May. And after falling 12 percent from October through April, prices climbed 3.6 percent from May to June.
“I think we’ve made the turn,” says Joel Naroff of Naroff Economic Advisors.
Values rose in 18 of the 20 cities, with only Las Vegas and Seattle posting monthly declines, of 1.1 percent and 0.1 percent, respectively. Thirteen cities have had at least three consecutive monthly gains.
The residential real estate market is still weak. Home values in the 20 cities are off 13.3 percent from July 2008 and 33.5 percent from their 2006 peak. Prices are now about where they were in fall 2003. But the year-over-year declines have been steadily shrinking in each of the past six months.
In some cities, the housing market is almost stable year-over-year, with prices in Cleveland, Dallas and Denver dipping 1.3 percent, 1.6 percent and 2.9 percent, respectively.
Yet some economists say the recent run-up is a brief reprieve, and home prices have yet to hit bottom. Patrick Newport of IHS Global Insight says the market will swoon again after housing inventories are fattened by a new wave of foreclosures and an $8,000 tax credit for first-time home buyers expires Nov. 30. Newport says prices will likely fall 6 percent before mounting a more sustainable rebound in mid-2010.
David Blitzer, chairman of Standard & Poor’s index committee, says, “The numbers are very encouraging, but it will probably take some time before we have convincing data that we’re past the bottom.”
Meanwhile, a closely watched consumer confidence index dipped to 53.1 in September from 54.5 in August, the Conference Board said. Analysts expected it to rise to 57.
Ian Shepherdson of High Frequency Economics noted most of the drop stemmed from consumer attitudes about current conditions, which reflects high unemployment. The more critical “expectations index” was stable, sliding to 73.3 from 73.8. The overall index is up from a record low of about 25 in February.
Still, “With the holiday season quickly approaching, this is not very encouraging news,” says Lynn Franco, head of the board’s consumer research center. The Dow Jones industrial average closed down 47 points at 9742.
Copyright 2009 USA TODAY
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