Home prices fall back to 2003 levels
Home prices in 20 US metros show continuing decline, down 3.6 percent from a year ago, according to S&P/Case Shiller index. Home prices fall in September in 15 of the 20 metro areas tracked by the index.
Americans shook off some of their concerns about the economy this month but a surprise fall in house prices in September underscored the weak foundations of the recovery.
Consumer sentiment rebounded in November from a 2-1/2-year low last month and U.S. retailers reported strong sales as the holiday shopping season got off to a positive start last week.
The Conference Board said Tuesday its index of consumer attitudes jumped to 56.0 from 40.9 in October, hitting the highest level since July and handily topping economists' forecasts for 44.0.
"This is a huge rise in consumer confidence. It gets us back to second-quarter levels and further underscores the dramatic move that we've seen in consumer spending,'' said Lindsey Piegza, economist at FTN Financial in New York.
Separate data Tuesday showed the beleaguered U.S. housing market is still struggling to get back on its feet. The S&P/Case Shiller composite index of 20 metropolitan areas for September fell 0.6 percent from August on a seasonally adjusted basis. Economists had predicted no change.
Prices in August were also revised to show a decline of 0.3 percent after originally being reported as unchanged.
The index had leveled off in recent months and analysts are hoping the market is at least stabilizing. Even so, prices are expected to stay weak into 2013 or longer, given the large number of homes still likely to come up for sale even as buyers stay on the sidelines.
Home prices are back at 2003 levels, the report said, and 15 of the 20 metro areas saw monthly price declines on a seasonally adjusted basis.
"At best we can hope that it doesn't overshoot. We're back down to kind of normal levels for home prices, but after our crisis, they could overshoot and become cheap overall.''
Home equity is a major source of wealth for Americans.
Compared to a year earlier, prices in the 20 cities were down 3.6 percent in September, slowing from a year-over-year decline of 3.8 percent the month before.
In contrast, a separate index from the U.S. Federal Housing Finance Agency, showed home prices rose 0.9 percent in September and were down just 2.2 percent from a year ago.
There was some other positive housing news. The number of homeowners who are 'underwater' on their mortgages – meaning they owe more than their home is worth -- decreased modestly in the third quarter, though levels remained high.
Data analysis firm CoreLogic said the number of properties with such 'negative equity' was 10.7 million, or 22.1 percent of all residential properties with a mortgage, a slight fall from the second quarter.
As the housing market struggles to recover, the large number of homeowners who are underwater has prompted concerns of more foreclosures to come if borrowers become unable to keep up with their payments or decide to walk away.