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By Shobhana Chandra
March 31 (Bloomberg) -- Home prices in 20 U.S. cities probably fell at the fastest year-over-year pace on record in January as demand plummeted and foreclosures rose, economists said ahead of a private report today.
The S&P/Case-Shiller index dropped 18.6 percent, according to the median forecast of 29 economists surveyed by Bloomberg News. A separate report will likely indicate consumers this month were still pessimistic about the economic outlook.
A glut of unsold properties may keep prices low even as policy efforts to unclog credit and aid borrowers begin to take hold and ease the housing slump, now in its fourth year. Shrinking wealth and a persistent lack of confidence in the economy may also temper a turnaround in consumer spending.
“It’ll be some time before we reach the nadir in home prices,” said Joseph Brusuelas, a director at Moody’s Economy.com in West Chester, Pennsylvania. “We’re starting to see some signs of stability in housing sales, but there’s a significant oversupply.”
S&P/Case-Shiller will report the 20-city home-price index at 9 a.m. Washington time. Estimates in the Bloomberg survey ranged from declines of 17.2 percent to 19 percent, after a drop of 18.5 percent in December. The gauge has fallen every month since January 2007. Year-over-year records started in 2001.
At 10 a.m., figures may show the New York-based Conference Board’s index of consumer confidence rose to 28 in March from a record-low 25 the prior month, according to the median forecast in the Bloomberg survey. Estimates ranged from 21.2 to 35. Records for the gauge began in 1967.
Housing Reports
Foreclosures surged 29.9 percent in February from a year earlier after rising 17.8 percent in January, according to RealtyTrac Inc. An estimated one in every 440 homes is in some stage of foreclosure.
Still, recent reports showed builders broke ground on 22 percent more homes in February than the prior month -- when starts plunged to a record low -- and that sales of new and previously owned houses increased, signaling the industry’s decline may be closer to reaching a bottom.
Lower prices and borrowing costs are attracting some buyers. The National Association of Realtors’ affordability index increased to a record in February. Mortgage rates for 30- year fixed loans fell to a record low in the week ended March 20, according to the Mortgage Bankers Association.
KB Home, a Los Angeles-based homebuilder that caters to first-time buyers, last week reported a narrower loss in the quarter ended Feb. 28, and said net new-home orders rose 26 percent from a year earlier, the first gain since the fourth quarter of 2005.
Recession Easing?
Also, while job losses are hurting Americans’ confidence, retail sales fell less than forecast in February and consumer spending had a second straight monthly gain. Economists predict the recession may ease in the second half of this year after the economy shrank 6.3 percent last quarter, the most since 1982.
Federal Reserve officials last week voiced confidence the economy will show signs of recovery by year-end, responding to unprecedented monetary stimulus and the Obama administration’s $787 billion fiscal package.
“Resumption of growth should not be too far off,” Minneapolis Fed President Gary Stern said in a speech on March 26. He added, “Once under way, the pace of expansion is likely to be subdued for some time.”
For the home-price index, the figures aren’t adjusted for seasonal effects so economists prefer to focus on year-over-year changes instead of month-to-month.
Bloomberg Survey
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Case Shil Consumer
Monthly Conf
YOY% Index
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Date of Release 03/31 03/31
Observation Period Jan. March
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Median -18.6% 28.0
Average -18.5% 27.7
High Forecast -17.2% 35.0
Low Forecast -19.0% 21.2
Number of Participants 29 68
Previous -18.6% 25.0
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4CAST Ltd. -18.2% 28.5
Action Economics --- 28.0
AIG Investments -18.0% 24.0
Aletti Gestielle SGR --- 25.0
Argus Research Corp. --- 27.0
Bank of Tokyo- Mitsubishi --- 21.2
Bantleon Bank AG --- 28.0
Barclays Capital -18.5% 29.0
BBVA -17.8% 25.6
BMO Capital Markets -18.8% 26.0
BNP Paribas --- 35.0
Briefing.com --- 28.0
Calyon --- 28.0
Castlestone Management LT --- 27.0
Citi --- 25.0
ClearView Economics -18.5% ---
Commerzbank AG -18.8% ---
Credit Suisse --- 35.0
Daiwa Securities America --- 30.0
Danske Bank --- 29.0
DekaBank --- 30.0
Desjardins Group -18.5% 29.5
Deutsche Bank Securities --- 30.0
Deutsche Postbank AG --- 28.0
DZ Bank -17.3% 25.0
First Trust Advisors --- 29.9
Fortis -17.9% 27.0
Goldman, Sachs & Co. --- 30.0
Helaba --- 25.0
Herrmann Forecasting -18.5% 27.6
High Frequency Economics -18.6% 30.0
HSBC Markets -17.2% 30.0
IDEAglobal -18.6% 27.0
IHS Global Insight --- 23.0
Informa Global Markets --- 27.0
ING Financial Markets -19.0% 29.0
Insight Economics --- 26.0
Intesa-SanPaulo --- 27.0
J.P. Morgan Chase -18.6% 28.0
Janney Montgomery Scott L -18.6% 30.0
Landesbank Berlin --- 27.0
Landesbank BW -18.5% 30.0
Lloyds TSB --- 28.0
Maria Fiorini Ramirez Inc --- 27.0
Merrill Lynch -18.7% 23.0
Mizuho Securities -19.0% 29.0
Moody’s Economy.com --- 27.3
Morgan Stanley & Co. --- 26.0
Natixis -18.7% 28.0
Newedge --- 27.0
Nomura Securities Intl. --- 28.0
Nord/LB --- 26.5
Raymond James --- 28.0
RBS Greenwich Capital --- 28.0
Ried, Thunberg & Co. --- 26.0
Schneider Foreign Exchang --- 29.0
Scotia Capital -18.6% 26.0
Societe Generale --- 30.0
Stone & McCarthy Research --- 28.0
TD Securities -18.7% 30.0
Thomson Reuters/IFR -19.0% 29.0
Tullett Prebon -18.5% 27.0
UBS Securities LLC --- 28.0
Unicredit MIB -18.8% 30.0
University of Maryland -18.3% 27.0
Wachovia Corp. --- 25.0
Wells Fargo & Co. --- 28.0
WestLB AG -18.6% 27.0
Westpac Banking Co. -18.7% 27.0
Wrightson Associates --- 26.0
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To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net
Last Updated: March 31, 2009 00:01 EDT
