| U.S. Economy: Housing prices continue to climb |
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30/09/2009 17:33 (51 Day 22:03 minutes ago) | |||||
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The FINANCIAL -- The market value of U.S. homes in 20 major cities climbed in July by the most in almost four years, prompting economists locally and around the country to debate whether stability has arrived and recovery comes next.
The Standard & Poor's/Case-Shiller index, a closely watched measure of the housing market's health, showed that prices of single-family homes rose in most parts of the country for the third month in a row, up 1.6 percent in July from June, The Washington Post reported. That's the biggest one-month jump in more than four years.
Prices were still down 13.3% compared with July 2008, but even that performance was better than expected. A panel of industry experts surveyed by Briefing.com had forecast a 14.2% loss, according to CNN Money. "The rate of annual decline in home price values continues to decelerate and we now seem to be witnessing some sustained monthly increases across many of the markets" said David Blitzer, chairman of the Index Committee at Standard & Poor's.
Craig Thomas, a senior economist with PNC Financial Services Group, called the report very encouraging, the same source reported." The rule of thumb is that three observations is a trend," he said. "There have been three straight good reports, so, this is a trend."
Falling home values had been a factor contributing to the global economy plunging into chaos because financial institutions made too many bad bets that U.S. home prices would never fall. Homeowners have lost trillions of dollars of wealth, according to Market Watch. Millions of homeowners have found themselves owing more on their house than it is worth. They cannot sell for what they owe, and they cannot refinance their home loans. Nor can they borrow against their home to finance their consumption.
Rising unemployment is now driving foreclosures. Another wave of foreclosures from interest-payment-only mortgages is anticipated, the same source reported. The Case-Shiller 20-city index tracks repeat sales on the same properties over time, but it closely tracks only 20 cities, not the whole country. Following are, in descending order, the price changes in each of the 20 cities in July:
Minneapolis, up 4.6%; San Francisco, up 3.3%; Chicago, up 2.7%; San Diego, Calif., up 2.5%; Atlanta, up 2.3%; Los Angeles, up 1.8%; Phoenix, up 1.8%; Washington, up 1.8%; Cleveland, up 1.5%; Denver, up 1.5%; Tampa, Fla., up 1.4%; Miami, up 1.3%; Boston, up 1.2%; Dallas, up 1.2%; Detroit, up 1.1%; Portland, Ore., up 1.1%; New York, up 0.8%; Charlotte, N.C., up 0.6%; Seattle, down 0.1%; and Las Vegas, down 1.1%.
According to Market Watch following are, in descending order, the price changes in each of the 20 cities over the past year, based on the Case-Shiller data for July:
Las Vegas, down 31.4%; Phoenix, down 28.5%; Detroit, down 24.6%; Miami, down 21.2%; Tampa, Fla., down 18.4%; San Francisco, down 17.9%; Minneapolis, down 17.3%; Seattle, down 15.3%; Los Angeles, down 14.9%; Chicago, down 14.2%; Portland, Ore., down 13.9%; San Diego, Calif., down 12.3%; Atlanta, down 11.8%; New York, down 10.3%; Washington, down 9.8%; Charlotte, N.C., down 9%; Boston, down 4.9%; Denver, down 2.9%; Dallas, down 1.6%; and Cleveland, down 1.3%.
Meanwhile, a monthly survey by the Conference Board, a private research group, found that consumer confidence unexpectedly dipped in September after improving in August, according to The Washington Post. The results, which largely capture consumer attitudes about the labor market, are "not as pessimistic as they were earlier this year," but they are "not very encouraging news" for the upcoming holiday spending season, Lynn Franco, director of the board's research center, said in a statement.
Home values are rebounding as low borrowing costs and government tax credits lift home sales. Combined with rising stock prices, the gains will begin to restore the $13 trillion plunge in net worth caused by the worst financial crisis since the Great Depression, a process that economists such as Brian Bethune say will take years to complete, Bloomberg wrote. Home prices are “a major, major turning point for the economy,” said Bethune, chief financial economist at IHS Global Insight in Lexington, Massachusetts. “We are eating away at the problem of household balance sheets.”
The New York-based Conference Board’s consumer confidence index fell to 53.1 in September from 54.5 the prior month, the private research group said today, amid growing concern over the lack of jobs, according to the same source. The gauge sank to 25.3 in February, the lowest level in data going back to 1967. The Standard & Poor’s 500 Index dropped after the confidence report, erasing earlier gains, and closed down 0.2 percent at 1,060.61 in New York. The yield on the benchmark 10- year Treasury note was little changed at 5:15 p.m. in New York from 3.28 percent late yesterday.
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