Posted: Tuesday, April 29th 2014 at 1:35pm
Home price gains slow for 3rd straight month; consumer confidence down in April
By The Associated Press
WASHINGTON (AP) -- U.S. home price gains cooled in February from the previous year for the third month in a row, as harsh winter weather and high buying costs have slowed sales. Meanwhile, another report shows U.S. consumer confidence was down in April
The Standard & Poor's/Case-Shiller 20-city home price index rose 12.9 percent in February compared with 12 months earlier. While healthy, that is down from a 13.2 percent gain in January.
And home prices fell in 13 of the 20 cities in February compared with the previous month. The index is not adjusted for seasonal variations, so those declines partly reflect weaker sales in the winter.
In addition to bad weather, sales have been held back by a limited supply of available homes, which has forced potential buyers to bid up prices. That's caused prices to increase even as sales have slowed. Sales of existing homes fell to their lowest level in 20 months in March.
With sales slowing, many economists forecast that price gains will keep dropping this year into the mid-single digits.
Higher prices may also be discouraging investors from buying homes, contributing to slower sales. Investors accounted for 17 percent of sales in March, according to the National Association of Realtors, down from 21 percent in February.
"The housing market is showing signs of slowing, but this was expected and is part of a broader return to normal," said Stan Humphries, chief economist at real estate data provider Zillow.
Prices in Las Vegas dipped 0.1 percent in February from the previous month, the city's first monthly decline in nearly two years. And home prices fell 1.6 percent in Cleveland and 0.7 percent in Tampa, Florida. Both monthly drops were the largest for those two cities since January 2012.
Las Vegas still posted the biggest 12-month gain, with an increase of 23.1 percent. But that's down from 24.9 percent in January. Many investors had snapped up homes in Las Vegas after prices plunged in the housing bust, causing sharp price gains.
Home sales and construction started recovering about two years ago after being hammered by the housing bust and Great Recession. But a jump in mortgage rates last spring caused sales of existing homes to start falling in the summer.
Sales have now fallen in seven of the past eight months. But the sales decline in March was small and many economists said it showed that existing-home sales had likely bottomed out.
Contracts to buy homes posted a healthy gain last month, the Realtors' group said yesterday. Signed contracts typically result in sales one to two months later, so the increase points to higher sales in the coming months.
New home sales, meanwhile, plunged 14.5 percent in March to the slowest pace in eight months, according to a government report last week. A jump in prices contributed to the decline.
The Case-Shiller index covers roughly half of U.S. homes. The index measures prices compared with those in January 2000 and creates a three-month moving average. The February figures are the latest available.
US CONSUMER CONFIDENCE DOWN IN APRIL
U.S. consumer confidence fell in April over concerns about hiring and business conditions, even though many people foresee a strengthening economy in the months ahead.
Concerns about the state of the economy fell for the first time since the federal government partially shut down in October.
Jennifer Lee, senior economist at BMO Capital Markets, said consumer sentiment tailed off in April because the pace of hiring, while strengthening, "is still slow, and the tougher environment is hurting American confidence."
Even though consumers are a bit more downbeat about existing economic conditions, their outlook for future growth held steady, noted Conference Board economist Lynn Franco. The expectations component of the index rose to an eight-month high in April.
Consumer confidence is closely watched because consumer spending accounts for about 70 percent of the U.S. economy.
The number of people who thought jobs were hard to get rose slightly to 32.5 percent from 31.4 percent in March. Economists expect sentiment about the job market to brighten if the pace of hiring quickens.
Employers added 192,000 jobs in March and 197,000 jobs in February, after cold winter weather had caused hiring to stall in the prior months. The unemployment rate held steady at 6.7 percent last month despite the hiring because more Americans are seeking work. People without jobs are counted as unemployed only when they start looking for one.
The Labor Department will release its April employment report on Friday. Economists have forecast that 210,000 jobs will have been added this month, according to a survey by FactSet.
The April consumer sentiment report showed that households with incomes of more than $125,000 continue to have the most confidence in the economy, as do people younger than 35.
Plans to buy autos and appliances fell in April, while slightly more Americans are considering whether to buy a home, according to the report.
Those purchases could be influenced by interest rates. The Federal Reserve has held rates near historic lows, though mortgage rates have increased over the past year.
At its December, January and March meetings, the Fed trimmed its monthly bond purchases. The purchases have been intended to keep long-term rates low. The Fed has cut back on its bond buying because it deems the recovery to have strengthened.
Fed officials are meeting this week and are expected to further reduce their monthly bond purchases.
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