Aug. 25 (Bloomberg) -- Home values in 20 U.S. metropolitan areas probably decreased at a slower pace and consumer confidence climbed, signs the recession is easing as the real- estate crisis dissipates, economists said before reports today.

The S&P/Case-Shiller home-price index fell 16.4 percent in June from a year earlier, the smallest drop in almost a year, according to the median forecast of 31 economists surveyed by Bloomberg News. A report from the Conference Board may show confidence rose in August for the first time in three months.

Lower prices and government stimulus efforts have made homes more affordable to first-time buyers, spurring increases in sales that will eventually stem the slide in property values. Gains in housing and stocks will speed the process of restoring the record loss of wealth that has shackled consumer spending, which accounts for 70 percent of the economy.

“Home sales are on the way up, building has bottomed, and home prices is the last ditch,” said John Herrmann, president of Herrmann Forecasting in Summit, New Jersey. “The rate of declines in prices is abating so rapidly that we could bottom out by next year. The recovery is starting.”

The S&P/Case-Shiller figures are due at 9 a.m. Estimates in the Bloomberg survey ranged from declines of 15.7 percent to 17.1 percent. Year-over-year records for the gauge, which was down 17.1 percent in May from a year earlier, began in 2001, and the measure has fallen every month since January 2007.

Gain in Confidence

At 10 a.m., the New York-based Conference Board may report its consumer confidence index increased to 47.9 from 46.6 in July, according to the Bloomberg survey median.

In addition to the 20-city index for June, the S&P/Case- Shiller report will also include national home-price figures for the second quarter.

Foreclosures represent one risk to a sustained improvement in values as more properties are thrown into an already flooded market. Americans fell behind on mortgage payments at a record pace last quarter, the Mortgage Bankers Association reported Aug. 20. The inventory of homes in foreclosure rose to the most in three decades of data, it said. Rising unemployment also may limit demand for housing.

At the same time, there are signs the worst of the crisis is over. Existing home sales in July jumped to the highest level in almost two years, boosted by lower prices, tax credits for first-time buyers and near-record-low borrowing costs, according to figures from the National Association of Realtors.

New-home sales, due tomorrow from the Commerce Department, probably rose in July for the fourth straight month, economists surveyed by Bloomberg project.

First Increase

The S&P/Case-Shiller price index climbed 0.5 percent in May from the prior month, the first gain since July 2006. The figures aren’t adjusted for seasonal effects, so economists prefer to focus on year-over-year changes.

The S&P builder supercomposite index is up 36 percent since the beginning of July as the housing outlook improved. The yield on Treasury securities has been little changed over that time even as the government sells more debt to finance its stimulus effort. The U.S. is auctioning $109 billion in notes over three days starting today, matching a record.

Demand has already improved enough for some construction companies to consider cutting back on discounts and incentives. Toll Brothers Inc., the largest U.S. luxury homebuilder, said contracts rose in the third quarter from a year earlier for the first time since 2005.

“As the supply of unsold housing inventory shrinks nationwide, and if consumer confidence continues to improve, we should see stronger demand,” Robert Toll, chief executive officer of the Horsham, Pennsylvania-based company, said on an Aug. 12 conference call. “It has already positively impacted our pricing power as we are reducing incentives in many markets.”

Robert Shiller, chief economist at MacroMarkets LLC and a professor at Yale University, and Karl Case, an economics professor at Wellesley College, created the home-price index based on research from the 1980s.

                        Bloomberg Survey

===============================================================
                         Case Shil Consumer
                           Monthly     Conf
                              YOY%    Index
===============================================================

Date of Release              08/25    08/25
Observation Period            June     Aug.
---------------------------------------------------------------
Median                      -16.4%     47.9
Average                     -16.4%     47.6
High Forecast               -15.7%     51.0
Low Forecast                -17.1%     42.0
Number of Participants          31       67
Previous                    -17.1%     46.6
---------------------------------------------------------------
4CAST Ltd.                  -16.4%     47.5
Action Economics            -16.9%     48.0
AIG Investments             -16.1%     49.0
Aletti Gestielle SGR          ---      47.5
Ameriprise Financial Inc      ---      47.0
Argus Research Corp.          ---      51.0
Banesto                       ---      48.0
Bank of Tokyo- Mitsubishi     ---      46.9
Bantleon Bank AG              ---      45.0
Barclays Capital            -16.5%     48.0
BBVA                        -16.9%     49.0
BMO Capital Markets         -16.5%     46.6
BNP Paribas                   ---      44.0
Briefing.com                -17.0%     48.0
Calyon                        ---      46.0
Capital Economics             ---      45.0
CIBC World Markets            ---      46.0
Citi                          ---      46.6
ClearView Economics         -17.1%     47.2
Commerzbank AG              -16.0%     47.0
Credit Suisse                 ---      50.0
Daiwa Securities America      ---      50.0
Danske Bank                   ---      44.4
DekaBank                    -16.2%     49.0
Desjardins Group            -16.7%     45.0
Deutsche Bank Securities      ---      48.0
Deutsche Postbank AG          ---      43.0
DZ Bank                     -16.5%     47.5
Exane                         ---      49.0
First Trust Advisors          ---      48.0
Fortis                      -15.7%     50.0
Goldman, Sachs & Co.          ---      47.0
Helaba                        ---      48.0
Herrmann Forecasting        -16.2%     49.1
HSBC Markets                -16.1%     49.0
IDEAglobal                  -16.4%     48.0
IHS Global Insight            ---      51.0
Informa Global Markets        ---      47.0
ING Financial Markets       -16.5%     46.0
J.P. Morgan Chase           -16.1%     ---
Janney Montgomery Scott L   -16.6%     49.2
Landesbank Berlin             ---      44.0
Landesbank BW               -16.0%     ---
Merrill Lynch/BAS           -16.8%     50.0
MFC Global Investment Man     ---      47.6
Mizuho Securities           -17.0%     46.0
Moody’s Economy.com           ---      47.0
Morgan Stanley & Co.          ---      48.0
Newedge                       ---      45.0
Nord/LB                       ---      46.0
Raymond James                 ---      46.0
RBC Capital Markets           ---      49.0
RBS Securities Inc.           ---      50.0
Ried, Thunberg & Co.        -16.1%     51.0
Schneider Foreign Exchang     ---      49.0
Scotia Capital              -16.2%     50.0
Societe Generale              ---      47.0
Stone & McCarthy Research     ---      47.9
TD Securities               -16.4%     47.5
Thomson Reuters/IFR           ---      48.0
UBS Securities LLC          -16.1%     47.5
UniCredit Research          -15.9%     49.5
Union Investment              ---      47.0
University of Maryland      -16.3%     48.0
Wells Fargo & Co.             ---      42.0
WestLB AG                   -16.5%     48.0
Westpac Banking Co.         -16.5%     46.0
Woodley Park Research       -17.0%     49.1
Wrightson Associates          ---      51.0
===============================================================

To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net

Last Updated: August 25, 2009 00:00 EDT