US home price fall eases, consumers bullish: survey

US home price fall eases, consumers bullish: survey
The Financial Express, December 28, 2009, Page 16

Bloomberg

The plunge in US home prices probably eased further and consumer confidence climbed, giving the economy a lift heading into 2010, economists said before reports this week.

Property values in 20 metropolitan areas probably fell 7.1% in October from a year earlier, the smallest 12-month drop since 2007, according to the median forecast of 29 economists surveyed by Bloomberg News before a December 29 report from S&P/Case-Shiller. Household sentiment improved in December for a second month, another report the same day may show.

The housing market may keep improving as administration and Federal Reserve efforts to lift sales and lower borrowing costs take hold. Best Buy Co and Jos A Bank Clothiers Inc were among retailers sweetening discounts heading into the holidays, giving consumers an incentive to boost spending. “Job losses are lessening, home prices are stabilising and stocks continue to ratchet higher,” said Michael Gregory, a senior economist at BMO Capital Markets in Toronto. “All these contribute to a rebound in confidence. Stabilisation in home prices is one of the key things to get more optimistic about a sustainable recovery.” The S&P/Case-Shiller 20-city index has been rising on a month-to-month basis since May, the first series of gains since the measure started dropping in August 2006.

The New York-based Conference Board's consumer confidence index may rise to 53 from 49.5 in November, according to the survey median. The measure reached a record-low 25.3 in February. A drop last month in the unemployment rate, rising incomes and holiday bargains probably gave sentiment a boost, economists said. Best Buy offered some DVDs for half off and Jos A Bank, a men's clothing chain, deepened discounts to at least 50%. Merchants were trying to draw procrastinators and shoppers delayed by the East Coast storms. To help ensure housing doesn't weaken again, President Barack Obama and Congress last month extended a tax credit for first-time homebuyers until April 30, from November 30, and expanded it to include some current owners.