Home Prices, Confidence See Modest Gains

NEW YORK CITY-Consumer confidence rose moderately last month, the Conference Board said Tuesday. However, the board noted that consumers’ outlook about current conditions remains pessimistic.

The monthly Consumer Confidence Index from the locally based Conference Board coincided with the release of another monthly measure of consumer behavior: the Standard & Poor’s/Case-Shiller Home Price Index, which showed a modest improvement in the second quarter as prices in 17 of 20 MSAs posted gains during June. Nonetheless, S&P’s David Blitzer says in a release that “while the numbers are upbeat, other more recent data on home sales and mortgages point to fewer gains ahead.”

After dipping to a five-month low of 51.5 in July, the Consumer Confidence Index inched up to 53.5 for August, while the board’s Expectations Index also saw a month-to-month improvement. At the same time, the Present Situation Index declined to 24.9 from 26.4 the month prior, a result that Lynn Franco, director of the board’s consumer research center, attributes to worries about employment.

“Expectations about future business and labor market conditions have brightened somewhat, but overall, consumers remain apprehensive about the future,” Franco says in a release. “All in all, consumers are about as confident today as they were a year ago.”

The S&P/Case-Shiller Index reported a 4.4% increase in home prices in the second quarter, following a 2.8% decline in Q1. Overall, home prices are up 4.6% year over year, according to S&P.

“Even with concerns about near-term developments, we recognize that the housing market is in better shape than this time last year,” says Blitzer, chairman of S&P’s index committee. He adds that the California cities measured in the index have rebounded from “some of the hardest hit to three of the four leading cities based on year-over-year gains.” However, Las Vegas remains “among the weaker cities,” Blitzer adds.

Bloomberg reported Tuesday that the August increase in the Confidence Index exceeded economists’ predictions. “We’re in a bit of a slowdown in what’s a fitful, moderate recovery,” chief economist John Ryding at RDQ Economics in New York told Bloomberg. “We won’t see a drop in consumer spending, but growth will be fairly modest.” The index is based on a monthly survey of 5,500 US households.