US house prices stabilising, consumer confidence dives

| August 31, 2011 | 0 Comments

The Standard & Poor’s/Case-Shiller composite index of 20 metropolitan areas fell in June on an annual basis, by 4.5% - albeit slower than the 4.6% drop in May.

The figure was slightly better than the 4.6% decline expected by the market.

The US housing market has remained subdued for some time now and many have suggested it is holding back the recovery of the world’s largest economy but the latest figures suggest the housing market may be stabilising.

Meanwhile, prices in the 20 cities increased before adjusting for seasonal changes, rising 1.1% in the month after rising 1% in May.

According to the group, the year-on-year figure provides better indications of trends in prices.

All of the 20 metropolitan areas in the index revealed an annual decline in June – led by an 11% fall in Minneapolis, while the smallest year-on-year fall was noted in Washington, declining by 1.2%.

Commenting on the index, David Blitzer, S&P’s index committee head, said: “This month’s report showed mixed signals for recovery in home prices.

“We are back to regional housing markets, rather than a national housing market where everything rose and fell together.”

In other news, US consumer confidence fell in August. The reading from the closely-monitored Consumer Confidence Index from the Conference Board dived to 44.5 this month from July’s reading of 59.2.

The reading remains far away from the 90 points required to show that the world’s largest economy is on solid footing.

Since the index commenced in 1967, the average reading has been 95.6.

There has been a mixture of good and bad news this week from the world’s largest economy, official figures revealed a rise in consumer spending for the month of July – boosted by an increase in car sales.

According to the Commerce Department, sales rose by 0.8% in July compared with the previous month – the largest rise in five months and much better than the 0.5% gain expected by the market.

Consumer spending is closely monitored as it accounts for approximately 70% of total economic output and the latest figures should allay fears about the world’s largest economy re-entering a recession, according to economists.

Another major concern for the US economy is the unemployment rate. Official data due later this week is expected to show unemployment remains above the 9% mark.

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