Consumer confidence dims as home prices advance
NEW YORK (Reuters) - Consumer confidence sank in July to its lowest since February on job market worries, underscoring the slow path to economic recovery, and home prices rose in May but without signs of a sustained rebound, reports released on Tuesday showed.
The Conference Board, an industry group, said consumer attitudes worsened this month as did their expectations about jobs being hard to get.
The group's index of consumer attitudes fell to 50.4 in July from an upwardly revised 54.3 in June, below the median forecast of 51 in a Reuters poll.
"There have been quite a few headwinds -- the fiscal stimulus is fading, the European situation certainly did have an impact on consumer confidence and inventories are being brought more into line," said David Sloan, economist at 4Cast Ltd in New York. "But clearly the big problem for consumers is jobs."
Treasuries trimmed losses and stocks pared gains after the dim consumer confidence reading as investors bought safe government assets.
"Concerns about business conditions and the labor market are casting a dark cloud over consumers that is not likely to lift until the job market improves," said Lynn Franco, Director of The Conference Board Consumer Research Center.
Single-family home prices rose more than expected in May, still reflecting robust spring sales spurred by now-expired homebuyer tax credits, Standard & Poor's/Case Shiller home price indexes showed on Tuesday.
May is a strong seasonal period for home sales, S&P said, and buyers who rushed to sign contracts by the April 30 deadline for up to $8,000 in tax credits have until September 30 to close loans.
Home prices have essentially moved sideways over the past seven months, however, and are likely to bounce around the bottom for the foreseeable future, S&P said.
"For me, a double-dip is another recession before we've healed from this recession ... The probability of that kind of double-dip is more than 50 percent," Robert Shiller, professor of economics at Yale University and co-developer of the price index told Reuters Insider.
The 20-city composite price index rose 0.5 percent on a seasonally adjusted basis in May after an upwardly revised 0.6 percent gain in April, topping the 0.2 percent rise forecast in a Reuters poll.
Prices on an unadjusted basis jumped 1.3 percent in May, after a 0.9 percent April gain and falls in the six prior months. The index was 4.6 percent lower than last May, S&P said.
With the recent upturn, prices still are 29.1 percent lower than the peak four years ago. A record inventory of foreclosed properties is widely seen preventing much of a price upturn in the near term.
"While May's report on its own looks somewhat positive, a broader look at home price levels over the past year still does not indicate that the housing market is in any form of sustained recovery," David M. Blitzer, chairman of the Index Committee at Standard & Poor's, said in a statement.
Seven of the 20 largest metro areas still reported lower prices than a year earlier.
Payback from the federal tax incentives went beyond most expectations and some reports have started to show some stabilization from historic lows.
Sales of new homes in June, reported on Monday, surged 23.6 percent but remained at the second-lowest level since the Commerce Department started keeping records in 1963.
High unemployment and wage cuts are keeping many potential buyers at bay.
The government is expected to report on Friday that gross domestic product growth slowed to a 2.5 percent annual rate in the second quarter from a 2.7 percent pace in the first.
(Additional reporting by John Parry, Chris Reese, Jennifer Rogers and Julie Haviv; Editing by James Dalgleish)