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Saturday September 24th, 2016 10:00PM

Home prices rise at slower rate; consumer confidence up

By The Associated Press
WASHINGTON (AP) -- U.S. home prices rose in March, but the gains are decelerating as fewer Americans can afford to buy. Meanwhile, a separate report shows that consumer confidence is up.<br /> <br /> The Standard & Poor's/Case-Shiller 20-city home price index rose 12.4 percent in March compared with 12 months earlier. While healthy, that rate of growth has slowed from both February and January.<br /> <br /> Home prices rose in 19 of the 20 cities in March compared with the previous month, with only New York registering a slight decline, Standard & Poor's reported Tuesday. Leading the gains was San Francisco with a 2.4 percent monthly increase, while prices in Seattle, another hub for technology firms, rose 1.9 percent.<br /> <br /> The housing market has struggled in recent months, after notching strong growth in the first half of 2013.<br /> <br /> Rising prices and higher interest rates beginning in the middle of last year made homes less affordable for would-be buyers.<br /> <br /> Meanwhile, a limited supply of homes is available to buy. New construction has focused increasingly on rental apartments, instead of single-family homes. And 9.7 million Americans are stuck in homes worth less than their mortgage debts, making them reluctant to sell, according to the real estate data firm Zillow.<br /> <br /> The price gains over the past 12 months were the "result of a witch's brew," said Stan Humphries, chief economist at Zillow. It was made possible by the lows of the housing bust that began in 2007, the historically low mortgage rates and a limited supply of homes on the market.<br /> <br /> "These influences are beginning to fade, and we're already seeing a monthly slowdown in home prices in more recent data," Humphries said.<br /> <br /> Ian Shepherdson, chief economist at Pantheon Macroeconomics, said the monthly gains reported by the Case-Shiller index seem excessive.<br /> <br /> "Every indicator of housing market activity and prices we know is slowing or falling outright," Shepherdson said.<br /> <br /> The index is not adjusted for seasonal variations, so the gains can reflect the warmer weather after a harsh winter.<br /> <br /> Tampa showed the largest slowdown in annual price gains. Its growth rate went from 13.4 percent year-over-year in February to 10.7 percent in March. Las Vegas and San Francisco posted the strongest year-over-year growth.<br /> <br /> Home sales and construction started recovering about two years ago from the Great Recession. But a sharp jump in mortgage rates last spring caused sales of existing homes to start falling in the summer.<br /> <br /> Average rates for fixed, 30-year mortgages last week are 4.2 percent, compared to 3.51 percent a year ago.<br /> <br /> The National Association of Realtors said Thursday that existing homes sold in April at a seasonally adjusted annual rate of 4.65 million, a 6.8 percent decrease over the past 12 months.<br /> <br /> The Case-Shiller index covers roughly half of U.S. homes. The index measures prices compared with those in January 2000 and creates a three-month moving average. The March figures are the latest available.<br /> <br /> CONSUMER CONFIDENCE UP<br /> <br /> U.S. consumers were slightly more confident in the economy in May than in April, partly because they are more optimistic about future hiring and income gains.<br /> <br /> The Conference Board says that its confidence index rose to 83 from 81.7 in April, which was revised lower. That's the second-highest reading since January 2008, just after the Great Recession began. Only March was higher at 83.9.<br /> <br /> But the index still isn't back to healthy levels. It regularly topped 90 before the recession.<br /> <br /> Just over one-fifth of Americans expect their incomes to grow over the next six months, according to the survey, the highest level since December 2007.<br /> <br /> Consumer sentiment is a closely watched figure, as consumer spending accounts for 70 percent of the nation's economic activity.
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