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By Bob Wills
June 30 (Bloomberg) -- Home prices in 20 major metropolitan areas probably fell in April at about the same pace as in prior months as foreclosures climbed, economists said ahead of a report today.
The S&P/Case-Shiller home-price index fell 18.6 percent from a year earlier following an 18.7 percent drop in March, according to the median of 33 forecasts in a Bloomberg News survey. Another report may show consumer confidence rose to a nine-month high in June.
The highest jobless rate in 25 years is contributing to record foreclosures, which are likely to depress values for months to come even as home sales steady. The loss of wealth associated with the decline in property prices is one reason Americans are saving more, leading to a slowdown in spending that will restrain an economic recovery.
“The market will likely remain out of balance for some time given the flood of foreclosures,” said Michelle Meyer, an economist at Barclays Capital Inc. in New York. “Home prices are likely to continue to fall, albeit at a slowing pace, even after the economy technically emerges from the recession.”
The S&P/Case-Shiller gauge is due at 9 a.m. New York time. Estimates in the Bloomberg survey ranged from drops of 17.7 percent to 19.4 percent. The index dropped 19 percent in the year ended in January, the most since records began in 2001.
Gaining Confidence
At 10 a.m., a report from the New York-based Conference Board may show its index of consumer confidence rose to 55.3, the highest since September, from 54.9 in May, according to the Bloomberg survey. Estimates ranged from 60 to 51.5. The measure set a record low in February.
The home-price index figures aren’t adjusted for seasonal effects so economists prefer to focus on year-over-year changes instead of month-to-month.
Foreclosure filings, including default and auction notices as well as property seizures, climbed 18 percent in May from a year earlier, according to Irvine, California-based RealtyTrac Inc. The number topped 300,000 for the third consecutive month, with an estimated one in every 398 homes in some stage of foreclosure.
The drop in prices caused by the seizures is helping stabilize home sales. Home resales climbed 2.4 percent in May to an annual pace of 4.77 million as the median sales prices slumped 17 percent, the third-largest decrease on record, the National Association of Realtors reported last week.
Distressed Areas
About 73 percent of all existing houses and condos sold in the Las Vegas-Paradise area were foreclosures last month, up from 56 percent a year earlier, according to figures from San Diego-based MDA DataQuick. Such sales accounted for 51 percent of all existing-home transactions in California, up from 40 percent a year ago, the research company said last week.
Declines in home values and stock prices destroyed a record $13.9 trillion in household wealth since late 2007, according to figures from the Federal Reserve.
The need to repair the damage will cause consumers to remain frugal, signaling the biggest part of the economy will be slow to recover. The savings rate climbed to a 15-year high of 6.9 percent last month, after reaching zero as recently as April of last year.
While the rise in foreclosures is likely to keep hurting prices, some companies are seeing signs demand is stabilizing.
More Sales
Lennar Corp., the third-largest U.S. homebuilder, said last week that home deliveries and new orders rose 47 percent and 67 percent, respectively, in the second quarter from the previous three months. Chief Executive Officer Stuart Miller said the housing market “experienced an uptick in sales” in the quarter while not yet recovering from the slump.
“While we are sensing pent-up demand in the market, rising unemployment, increased foreclosures and tighter credit standards continue to present challenges for the industry,” Miller said in a June 25 statement. “This combined with a recent spike in mortgage rates has made it difficult to predict when the market will ultimately turn the corner.”
Concern about rising mortgage rates has caused builder shares to surrender almost half of a rally that took place from March to May. Through yesterday, the Standard & Poor’s builder supercomposite index was down 52 points since May 4. The gauge climbed 114 points from March 6 to May 4 as borrowing costs reached record lows.
Bloomberg Survey
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Chicago Case Shil Consumer
PM Monthly Conf
Index YOY% Index
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Date of Release 06/30 06/30 06/30
Observation Period June April June
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Median 39.0 -18.6% 55.3
Average 39.0 -18.7% 55.3
High Forecast 44.0 -17.7% 60.0
Low Forecast 32.5 -19.4% 51.5
Number of Participants 57 33 69
Previous 34.9 -18.7% 54.9
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4CAST Ltd. 44.0 -19.1% 57.0
Action Economics 39.0 -19.1% 57.0
AIG Investments 42.0 -18.6% 57.0
Aletti Gestielle SGR 39.0 --- 53.0
Ameriprise Financial Inc 38.0 --- 55.5
Argus Research Corp. 40.0 --- 57.0
Banesto 38.5 -18.6% 56.5
Bank of Tokyo- Mitsubishi 40.2 --- 54.8
Bantleon Bank AG 40.0 --- 53.0
Barclays Capital 40.0 -18.6% 56.0
BBVA 34.8 -18.1% 54.3
BMO Capital Markets 39.0 -19.1% 59.0
BNP Paribas 32.5 --- 53.0
Briefing.com 38.5 --- 56.0
C I T I C Securities 37.0 -19.3% 54.0
Capital Economics 38.5 -19.3% 60.0
CIBC World Markets 39.0 --- 56.0
Citi 37.5 --- 52.0
ClearView Economics 40.0 -19.4% ---
Commerzbank AG 39.0 -18.6% 53.0
Credit Suisse 40.0 --- 55.0
Daiwa Securities America --- --- 57.0
Danske Bank 42.9 --- 54.0
DekaBank 38.8 --- 56.0
Desjardins Group 40.0 -18.6% 53.5
Deutsche Bank Securities 37.0 --- 57.0
Deutsche Postbank AG --- --- 55.3
DZ Bank 37.0 -18.2% 54.0
Exane 40.0 --- ---
First Trust Advisors 41.9 --- 53.0
Fortis 42.0 -18.9% 60.0
Goldman, Sachs & Co. 40.0 --- 55.0
Herrmann Forecasting 40.0 -18.6% 57.5
High Frequency Economics 40.0 -18.6% 54.9
Horizon Investments 40.0 --- 57.0
HSBC Markets 40.0 -18.5% 54.5
IDEAglobal 38.0 -18.6% 57.0
IHS Global Insight --- --- 53.5
Informa Global Markets 37.5 --- 56.5
ING Financial Markets 39.0 -19.0% 52.0
Insight Economics 37.5 -18.0% 57.5
Intesa-SanPaulo 40.0 --- 54.0
J.P. Morgan Chase --- -19.0% 57.0
Johnson Illington Advisor 38.0 --- 53.5
Landesbank BW 36.0 -18.3% 53.0
Maria Fiorini Ramirez Inc 34.9 -18.7% 54.9
Merrill Lynch 34.0 -19.2% 52.0
MFC Global Investment Man --- --- 56.0
Moody’s Economy.com 38.0 --- 55.0
Morgan Stanley & Co. --- --- 55.0
National Bank Financial --- --- 55.3
Natixis --- -18.9% 55.0
Nomura Securities Intl. 42.0 --- ---
RBS Securities Inc. --- --- 59.0
Ried, Thunberg & Co. --- --- 55.0
Schneider Foreign Exchang --- --- 55.2
Scotia Capital --- -19.3% 55.5
Societe Generale 43.0 --- 56.0
Standard Chartered 39.0 -18.5% 55.0
Stone & McCarthy Research 35.4 --- 52.0
TD Securities 39.0 -19.2% 56.0
Thomson Reuters/IFR --- --- 57.2
Tullett Prebon 38.0 --- 55.4
UBS Securities LLC 42.0 -17.7% 53.0
Unicredit MIB --- -18.5% 56.0
University of Maryland 38.5 -18.6% 57.0
Wachovia Corp. --- --- 51.5
Wells Fargo & Co. 39.0 --- 57.0
WestLB AG 38.5 -19.0% 55.4
Westpac Banking Co. 39.0 --- 56.0
Woodley Park Research 42.8 -18.5% 53.8
Wrightson Associates 37.0 --- 55.0
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To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net
Last Updated: June 30, 2009 00:00 EDT
