Home Prices in 20 U.S. Cities Probably Cooled in September as Sales Fell
Home Prices in U.S. Cities Probably Cooled
Jim R. Bounds/Bloomberg
Real-estate prices in 20 U.S. cities probably rose in September at the slowest pace in eight months, economists said today.
Real-estate prices in 20 U.S. cities probably rose in September at the slowest pace in eight months, economists said today. Photographer: Jim R. Bounds/Bloomberg
Nov. 29 (Bloomberg) -- Craig Johnson, president of Customer Growth Partners LLC, discusses U.S. retail sales over Thanksgiving weekend and the outlook for the holiday shopping season. Johnson speaks with Betty Liu on Bloomberg Television’s “In the Loop.” (Source: Bloomberg)
Real-estate prices in 20 U.S. cities probably rose in September at the slowest pace in eight months, showing the latest slump in sales is destabilizing housing, economists said before a report today.
The S&P/Case-Shiller index of property values climbed 1 percent from September 2009, the smallest year-over-year gain since February, when the market began to recover following a three-year drop, according to the median forecast of 28 economists surveyed by Bloomberg News. Other reports may show consumer confidence rose and businesses expanded.
The end of a government tax credit for homebuyers and unemployment hovering near 10 percent have led to a decrease in demand, delaying a recovery in the industry that precipitated the worst recession since the 1930s. Declining home values threaten to undermine the improvement in consumer confidence that is helping boost spending and accelerate economic growth.
“We’re in for more downward adjustment on home prices,” said Neil Dutta, an economist at Bank of America Merrill Lynch Global Research in New York. “People don’t want to buy a house when they think it’s going to lose value. A return to a normal housing market is going to be measured in years, not months.”
The S&P/Case-Shiller figures are due at 9 a.m. New York time. Survey estimates ranged from an increase of 1.6 percent to a decline of 3.4 percent, after a 1.7 percent gain in August.
Gaining Confidence
The New York-based Conference Board’s consumer sentiment gauge, due at 10 a.m., rose to 53 in November from 50.2 a month earlier, according to the Bloomberg survey median. Estimates ranged from 50 to 60.
At 9:45 a.m., the Institute for Supply Management-Chicago Inc. may report its business barometer fell to 59.9 this month from 60.6 in October, the Bloomberg survey showed. Readings greater than 50 signal growth.
The Case-Shiller report may show home prices fell 0.4 percent in September from the prior month, the third straight decline, according to economists surveyed by Bloomberg.
The year-over-year gauges provide better indications of trends in prices, the group has said. The panel includes Karl Case and Robert Shiller, the economists who created the index.
Housing demand has slumped after a tax credit worth as much as $8,000 expired. Sales of existing homes, which now make up more than 90 percent of the market, fell more than forecast in October as foreclosure moratoriums and a lack of credit disrupted real estate, figures from the National Association of Realtors showed last week. In July, sales ran at the weakest pace in a decade’s worth of record-keeping by the group.
Three-Month Average
The Case-Shiller gauge is based on a three-month average, which means the September data are still being influenced by the plunge in transactions in August and July.
Dwindling purchases are hurting builder shares. The Standard & Poor’s Supercomposite Homebuilder Index, which includes Toll Brothers Inc. and Lennar Corp., has plunged 33 percent since reaching a 19-month high on May 3. The broader S&P 500 Index is down 1.2 percent.
The Federal Reserve announced this month it will buy another $600 billion in Treasury securities through June in a bid to keep borrowing costs low and spur growth. The weakness in housing figured in their deliberations.
“Despite further declines in mortgage interest rates in recent months, other factors continued to restrain housing demand, including consumer pessimism about the outlook for jobs and income, the depressed rate of household formation, and tight underwriting standards for mortgages,” Fed policy makers said in minutes of their Nov. 2-3 meeting released Nov. 23.
D.R. Horton Inc., the second-largest U.S. homebuilder by revenue, expects sales will remain weak in 2011, and Chief Executive Officer Donald Tomnitz said plans to lift business include “adjusting our price points” to demand.
“We expect another very challenging year for the homebuilding industry as the fundamental drivers of demand --the overall economy, job growth and consumer confidence -- are still very weak,” Tomnitz said on a conference call with analysts on Nov. 12.
Bloomberg Survey
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Case Shil Case Shil Chicago Consumer
Monthly Monthly PM Conf
MOM% YOY% Index Index
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Date of Release 11/30 11/30 11/30 11/30
Observation Period Sept. Sept. Nov. Nov.
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Median -0.4% 1.0% 59.9 53.0
Average -0.7% 0.8% 59.4 53.0
High Forecast 0.1% 1.6% 62.1 60.0
Low Forecast -5.0% -3.4% 55.0 50.0
Number of Participants 18 28 63 78
Previous -0.3% 1.7% 60.6 50.2
--------------------------------------------------------------
4CAST Ltd. --- 1.0% 59.6 53.5
ABN Amro Inc. -0.2% --- 60.0 53.0
Action Economics --- --- 58.0 53.0
Aletti Gestielle SGR --- --- 60.2 50.5
Ameriprise Financial --- --- 61.0 52.0
Banesto --- 1.3% 60.0 52.2
Bank of Tokyo- Mitsubishi --- --- 59.9 54.4
Bantleon Bank AG --- --- 59.8 54.0
Barclays Capital -0.4% 1.3% 60.0 52.0
Bayerische Landesbank --- --- --- 53.0
BBVA -0.3% 1.0% 59.5 53.0
BMO Capital Markets --- 1.3% 59.9 52.6
BNP Paribas --- --- 59.0 53.0
BofA Merrill Lynch Research --- -1.0% 59.0 53.0
Briefing.com --- 1.0% 58.0 52.0
Capital Economics -1.0% 0.7% 60.0 52.0
CIBC World Markets --- --- 58.0 51.0
Citi --- --- 58.0 58.0
ClearView Economics -0.4% --- 58.0 51.0
Commerzbank AG --- 1.5% 61.0 55.0
Credit Agricole CIB --- --- 61.0 52.0
Credit Suisse --- --- 61.0 60.0
Daiwa Securities America --- --- --- 52.0
Danske Bank --- --- 60.7 52.1
DekaBank --- --- 58.0 54.0
Desjardins Group --- 1.5% 57.0 53.5
Deutsche Bank Securities --- 1.2% 60.0 55.0
Deutsche Postbank AG --- --- --- 52.5
DZ Bank --- 1.4% 58.0 55.0
Exane --- --- 58.0 53.0
First Trust Advisors --- --- 62.1 53.9
FTN Financial --- --- 61.0 53.0
Goldman, Sachs & Co. --- --- 60.0 53.0
Helaba --- --- 58.0 53.0
High Frequency Economics -0.4% --- 60.0 53.0
Horizon Investments --- --- 59.0 55.0
HSBC Markets -0.4% --- 57.0 54.5
Hugh Johnson Advisors --- --- 60.0 50.6
Ibersecurities --- --- 58.6 52.9
IDEAglobal --- 0.8% 62.0 52.0
IHS Global Insight --- --- --- 53.0
Informa Global Markets --- --- 58.0 51.5
ING Financial Markets -0.3% --- 60.0 52.5
Insight Economics --- 1.0% 61.0 52.0
Intesa-SanPaulo --- --- 60.0 53.5
J.P. Morgan Chase --- 0.3% --- 52.5
Janney Montgomery Scott -0.8% 0.9% --- 51.0
Jefferies & Co. --- --- 61.0 52.0
Landesbank Berlin --- --- 58.5 52.5
Landesbank BW --- 1.1% 60.0 54.0
Maria Fiorini Ramirez --- --- --- 52.5
MF Global --- --- 59.0 55.0
Mizuho Securities -0.3% --- 60.6 50.5
Moody’s Analytics --- --- 59.8 54.0
Morgan Stanley & Co. --- --- --- 55.0
National Bank Financial --- --- --- 54.0
Natixis --- 1.0% --- 52.0
Newedge --- --- 59.2 53.0
Nomura Securities Intl. --- 0.3% 60.0 ---
Nord/LB --- --- 60.0 ---
Pierpont Securities LLC --- --- --- 54.0
PineBridge Investments --- -0.1% 57.0 55.0
Raiffeisen Zentralbank --- --- 58.0 50.0
Raymond James --- --- --- 52.5
RBC Capital Markets --- --- 58.7 52.7
RBS Securities Inc. --- --- --- 52.5
Scotia Capital --- 1.1% --- ---
Societe Generale -5.0% -3.4% 61.3 53.9
Standard Chartered -1.0% --- --- 52.5
State Street Global Markets -0.4% 0.9% 60.5 53.3
Stone & McCarthy Research --- --- 60.5 52.5
TD Securities -0.5% --- 61.0 52.0
Thomson Reuters/IFR --- 1.0% 59.0 55.0
UBS -1.4% 0.3% 58.5 52.0
UniCredit Research --- 1.6% --- 53.5
Union Investment --- --- --- 51.0
University of Maryland 0.1% 1.4% 58.5 52.0
Wells Fargo & Co. --- --- --- 56.0
WestLB AG 0.1% 1.4% 59.9 52.0
Westpac Banking Co. --- --- 55.0 53.0
Wrightson ICAP -0.4% --- 60.0 52.0
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To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net
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