By Bob Willis
Sept. 29 (Bloomberg) -- Home values in 20 U.S. metropolitan areas probably declined at a slower pace and consumer confidence improved, signs the recession is abating as the real-estate crisis eases, economists said before reports today.
The S&P/Case-Shiller home-price index fell 14.2 percent in July from a year earlier, the least in 17 months, according to the median forecast of 35 economists surveyed by Bloomberg News. The Conference Board may say its gauge of consumer sentiment rose this month to the highest level in a year.
Foreclosure-driven price declines, low borrowing costs and government tax credits for first-time buyers have lifted home sales for much of this year, helping to slow the decline in prices. Stability in real-estate values and rising stock prices may help set the stage for a recovery in the consumer spending that accounts for two thirds of the economy.
“The year-on-year decline in home prices is slowing considerably, showing a bottoming in home prices,” said Michelle Meyer, an economist at Barclays Capital Inc. in New York. “We look for overall confidence to improve in the near term as the general economy rebounds.”
The S&P/Case-Shiller figures are due at 9 a.m. Estimates in the Bloomberg survey ranged from declines of 12.5 percent to 15 percent. Year-over-year records for the gauge, which was down 15.4 percent in June from a year earlier, began in 2001, and the measure has fallen every month since January 2007.
At 10 a.m., the New York-based Conference Board may report its consumer confidence index increased to 57 this month from 54.1 in August, according to the Bloomberg survey median.
Home Sales Rise
Combined sales of new and existing homes have risen for four out of the last five months, signaling the worst of the housing crisis is over.
Sales of new homes climbed in August to the highest level in almost a year, the Commerce Department reported last week. Sales of existing homes unexpectedly declined, while remaining at the second-highest level in 23 months, the National Association of Realtors reported last week.
The S&P/Case-Shiller price index for June rose 1.4 percent from the previous month, following a 0.5 percent increase in May, the first back-to-back gains since 2006. The monthly figures aren’t adjusted for seasonal effects, so economists prefer to focus on year-over-year changes.
Signs of a revival in the housing market have sent homebuilder stocks higher. The Standard & Poor’s Supercomposite Homebuilding index is up 27 percent so far this year, compared with an 18 percent increase for the S&P 500 Index.
Share price gains, along with a slower pace of job losses, have also helped boost consumer confidence. The economy lost 216,000 jobs in August, the least in a year, the Labor Department reported on Sept. 4.
Household Wealth
The gains in share prices contributed to a $2 trillion increase in household wealth in the second quarter. Net worth for households and non-profit groups climbed to $53.1 trillion from $51.1 trillion in the first quarter, marking the first gain since the third quarter of 2007, according to a Sept. 17 report from the Federal Reserve.
Fed policy makers last week said they would keep the benchmark lending rate near zero “for an extended period,” while noting that the economy and housing had strengthened. They also said they would slow the central bank’s purchases of mortgage debt and extend the program through the first quarter of 2010 in order to keep lending rates low.
Lennar Corp., the third-largest U.S. homebuilder, is among companies that see demand improving, even as losses mount. The Miami-based company said last week it expects to turn a profit in fiscal 2010.
Signs of Improvement
“In the third quarter we started to see some real signs that the housing market is in fact starting to stabilize,” Stuart Miller, Lennar’s chief executive officer, said on a Sept. 21 conference call. “The sense that now is the time to buy is starting to gain momentum.”
Mounting foreclosures present a risk of renewed price declines as more homes are thrown onto the market. Foreclosure filings in August exceeded 300,000 for the sixth straight month, according to data from RealtyTrac Inc. A total of 358,471 properties received a default or auction notice or were seized last month, 18 percent more than a year earlier.
KB Home, the Los Angeles-based homebuilder that sells to first-time buyers, on Sept. 25 reported a third-quarter loss exceeding analysts’ estimates and said a housing recovery isn’t imminent.
“The precise timing of a housing recovery remains uncertain,” Chief Executive Officer Jeffrey Mezger said on a conference call with analysts.
Bloomberg News
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Case Shil Consumer
Monthly Conf
YOY% Index
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Date of Release 09/29 09/29
Observation Period July Sept.
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Median -14.2% 57.0
Average -14.1% 57.4
High Forecast -12.5% 70.0
Low Forecast -15.0% 54.0
Number of Participants 35 76
Previous -15.4% 54.1
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4CAST Ltd. -14.3% 57.0
Action Economics -14.7% 57.0
AIG Investments -13.6% 59.0
Aletti Gestielle SGR --- 58.0
Ameriprise Financial Inc --- 57.0
Argus Research Corp. --- 60.0
Banesto -14.3% 57.0
Bank of Tokyo- Mitsubishi --- 58.5
Bantleon Bank AG --- 58.0
Barclays Capital -14.0% 57.0
Bayerische Landesbank -14.5% 56.0
BBVA -13.1% 57.9
BMO Capital Markets -14.3% 57.0
BNP Paribas --- 58.0
Briefing.com -14.5% 59.5
Calyon --- 56.0
Capital Economics -14.0% 55.0
CIBC World Markets --- 58.0
Citi --- 57.0
ClearView Economics -14.6% 56.0
Commerzbank AG -14.3% 56.0
Credit Suisse --- 70.0
Daiwa Securities America --- 57.0
Danske Bank --- 56.2
DekaBank -13.9% 56.5
Desjardins Group -14.7% 56.0
Deutsche Bank Securities --- 56.5
Deutsche Postbank AG --- 56.0
First Trust Advisors --- 62.0
Fortis -14.0% 56.0
Goldman, Sachs & Co. --- 59.0
Helaba --- 57.0
Herrmann Forecasting -14.2% 60.1
High Frequency Economics -14.0% 56.0
HSBC Markets -14.0% 59.0
IDEAglobal -14.4% 57.0
IHS Global Insight --- 54.0
Informa Global Markets --- 55.8
ING Financial Markets -14.5% 56.5
Insight Economics -12.5% 55.0
Intesa-SanPaulo --- 55.0
J.P. Morgan Chase -13.8% 57.0
Janney Montgomery Scott L -14.6% 55.0
Jefferies & Co. --- 57.5
Johnson Illington Advisor --- 57.5
Landesbank Berlin --- 58.0
Maria Fiorini Ramirez Inc --- 57.0
Merrill Lynch/BAS -14.0% 56.0
MFC Global Investment Man --- 58.0
Mizuho Securities -15.0% 56.0
Moody’s Economy.com --- 58.8
Morgan Stanley & Co. --- 55.0
National Bank Financial --- 58.5
Natixis -13.7% 56.4
Newedge --- 55.6
Nord/LB --- 58.0
Raymond James --- 58.5
RBC Capital Markets --- 59.0
RBS Securities Inc. --- 59.0
Ried, Thunberg & Co. -13.8% 58.0
Schneider Foreign Exchang --- 60.4
Scotia Capital -14.4% 56.0
Standard Chartered -14.2% 57.0
Stone & McCarthy Research --- 57.0
TD Securities -14.2% 58.0
Thomson Reuters/IFR --- 57.5
Tullett Prebon --- 58.5
UBS --- 58.5
UniCredit Research -13.8% 57.0
Union Investment --- 60.0
University of Maryland -14.3% 56.3
Wells Fargo & Co. --- 55.5
WestLB AG -14.3% 58.0
Westpac Banking Co. -14.2% 55.0
Woodley Park Research -13.5% 56.5
Wrightson Associates --- 58.0
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To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net
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