The Federal Housing Finance Agency released its S&P Case-Shiller 20 City index on Tuesday—the prominent indicator for home prices— for the month of March. The 2.6% decrease, up from a 3.5% decrease in February, is lower than expected, which indicates that the value of residential real estate taken from 20 major cities is increasing, slowly but surely.
Previous numbers have indicated that the majority of cities taken in this survey have been rebounding at slow, but positive rates. Although 15 out of the 20 cities profiled have decreasing values over a year ago, the year-ago average is just 1.9%. The index still reports negative growth, regardless of the 16 out of 20 cities profiled that have positive growth, with overall decreases in values. Despite rebounding from the sharp decrease in the first quarter of 2009, many cities are still experiencing negative growth over prices three years later.
Atlanta, leading the group with the largest change (-17.7%) of year-ago prices, changed at a much slower rate (-0.9%) that the February/January change of -2.5%. Detroit followed behind Atlanta with -4.4% change, and Cleveland and Las Vegas both are still experiencing depreciation with almost flat or decreasing prices.
Although the March 2012 data shows that housing prices have been slowing rebounding, there are still cities—Atlanta, Cleveland, Detroit, and Las Vegas— in which overall depreciation haunts the area’s single-family homes. The numbers reported by the FHFA indicate that this type of consumer asset could be increasing in value, an encouraging sign in a time of economic turmoil.
On Wednesday, the National Association of Realtors reported that the number of pending home sales also dropped, after a three-month increase, but was up dramatically over year-ago data. This pending home sales index this month decreased 5.5% to 95.5% in April. This decline comes after the pending home sales peaked at 101.1 in March 2012 after following the trend in slow recovery found elsewhere in the economy.
The MBA Mortgage Index was also released on Tuesday, showing that the overall applications for a mortgage decreased 1.3% from the previous week, and down 3.9% from last year during the same week.
Also, released Tuesday was the Consumer Confidence Index that showed overall confidence within consumer markets decreased from 68.7 in April to 64.9 for May. The further decline this month shows that, overall, consumers were less positive about current business and labor markets and increasingly uncertain about what the short-term might lead.
The Consumer Confidence Index gives a less than ideal preview of the expectations for the coming month. One sub-indicator did show that consumers were positive about their potential income, suggesting that spending might sustain through the month of June.
These four indicators show that the overall outlook for the month of May is dimmer than expected. Even though, these four indexes all seem like bad news, the light at the end of the tunnel may be brighter than it seems. The Pending Home Sales index (up 14.4% over last year), the Case-Shiller 20 City Index (down 2.6% from year-ago prices), the MBA Mortgage Index (down 3.9% from one year ago), and the Consumer Confidence index create a mixed back of indicators. We can be sure to expect more bumps in the economic road to recovery, but only with the right about of time and patience.
