Prices of Homes in U.S. Probably Dropped, Consumers’ Confidence Picked Up

Residential real estate prices probably dropped in February by the most in more than a year, a sign the housing market is struggling to stabilize, economists said before a report today.

The S&P/Case-Shiller index of home values in 20 cities fell 3.3 percent from February 2010, the biggest 12-month decrease since November 2009, according to the median forecast of 25 economists surveyed by Bloomberg News. Another report may show consumer confidence increased in April as job gains helped cushion the effects of rising gasoline costs.

Increases in foreclosures are adding to a growing inventory of unsold homes, which may further depress prices and dissuade potential buyers anticipating even cheaper dwellings. Declining property values also limit construction and restrain consumer spending as homeowners have less equity to borrow against.

“The massive overhang of houses is going to keep pressure on prices,” said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York. “We need supply and demand to be in much better balance, and with the enormous amount of supply out there -- both existing and looming from foreclosures soon to be -- that’s going to take a while.”

The S&P/Case-Shiller index, based on a three-month average, is due at 9 a.m. New York time. Survey estimates ranged from declines of 2.5 percent to 4 percent. Prices dropped 3.1 percent in the 12 months ended January.

The New York-based Conference Board’s consumer confidence gauge, due at 10 a.m., rose to 64.5 this month from 63.4 in March, according to the survey median. Projections ranged from 57 to 68.

Fed Meeting

Federal Reserve policy makers, who begin a two-day meeting today, are likely to affirm they’ll finish a $600 billion Treasury-purchase program on schedule at the end of June, according to economists such as Neal Soss, chief economist at Credit Suisse in New York. Chairman Ben S. Bernanke will hold his first press conference following the central bank’s statement tomorrow, giving him an opportunity to discuss his next steps.

Consumers’ economic outlook also brightened in similar surveys this month. The Bloomberg Consumer Comfort Index rose last week, and the Thomson Reuters/University of Michigan preliminary consumer sentiment index advanced to 69.6 in April.

The Case-Shiller report may show home prices fell 0.4 percent in February from the prior month, the eighth straight decline, according to the Bloomberg survey.

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.

Beige Book

Real estate markets for single-family homes “either were little changed from low levels or continued to weaken across all Districts,” in February and March, according to the Fed’s Beige Book. For homebuilders, “the spring building season is likely to be slower than previously anticipated,” the Fed said in April 13 regional report.

With unemployment close to 9 percent, home values declining and a swelling supply of unsold properties, confidence among U.S. homebuilders fell in April. The National Association of Home Builders/Wells Fargo sentiment index declined to 16 from 17 in March, the Washington-based group said last week. Readings below 50 mean more respondents said conditions were poor.

Builder shares have underperformed the broader stock market in the last year. The Standard & Poor’s Supercomposite Homebuilder Index of 12 builders has declined 17 percent in the 12 months ended yesterday, compared with a 10 percent increase for the broader S&P 500 Index.

KB Home (KBH), the Los Angeles-based homebuilder that targets first-time buyers, this month reported a bigger-than-expected loss for the quarter ended Feb. 28 as orders plunged.

“Today’s consumers remain very cautious, whether they have concerns about home prices falling further, their job status, their ability to qualify for a loan, or general confidence in the economy,” President and Chief Executive Officer Jeffrey Mezger said during a conference call with analysts on April 5. “A sustained, broad-based housing recovery will not occur until we start to experience material job creation.”

                        Bloomberg Survey

==============================================================
                         Case Shil Case Shil Consumer Richmond
                           Monthly  Monthly     Conf      Fed
                              MOM%     YOY%    Index    Index
==============================================================
Date of Release              04/26    04/26    04/26    04/26
Observation Period            Feb.     Feb.    March    March
--------------------------------------------------------------
Median                       -0.4%    -3.3%     64.5       20
Average                      -0.5%    -3.3%     64.2       20
High Forecast                 0.3%    -2.5%     68.0       23
Low Forecast                 -1.3%    -4.0%     57.0       18
Number of Participants          20       25       68        8
Previous                     -0.2%    -3.1%     63.4       20
--------------------------------------------------------------
4CAST Ltd.                    ---     -3.2%     64.0     ---
ABN Amro                     -0.4%     ---      65.0     ---
Action Economics              ---      ---      63.0     ---
Aletti Gestielle              ---      ---      64.3     ---
Ameriprise Financial          ---      ---      64.5       18
Banesto                       ---     -3.3%     63.8     ---
Bank of Tokyo- Mitsubishi     ---      ---      66.6     ---
Bantleon Bank AG              ---      ---      61.0     ---
Barclays Capital             -0.3%    -3.3%     65.0     ---
Bayerische Landesbank         ---      ---      65.0     ---
BBVA                         -0.5%    -3.1%     63.0     ---
BMO Capital Markets           ---     -3.5%     65.0     ---
BNP Paribas                   ---      ---      57.0     ---
BofA Merrill Lynch            ---     -3.7%     63.4     ---
Briefing.com                  ---     -3.2%     65.0     ---
Capital Economics            -0.4%    -3.4%     60.0     ---
Citi                          ---      ---      65.0     ---
ClearView Economics          -0.3%     ---      62.5     ---
Commerzbank AG                ---      ---      64.5     ---
Credit Agricole CIB           ---      ---      64.5     ---
Credit Suisse                 ---      ---      62.0     ---
Daiwa Securities America      ---      ---      65.0     ---
DekaBank                      ---      ---      65.5     ---
Desjardins Group              ---     -3.2%     64.0     ---
Deutsche Postbank AG          ---      ---      64.0     ---
DZ Bank                       ---     -2.8%     61.5     ---
Fact & Opinion Economics      ---     -3.3%     68.0       23
First Trust Advisors          ---      ---      66.3     ---
FTN Financial                 ---      ---      64.0     ---
Goldman, Sachs & Co.         -0.3%     ---      65.0     ---
Helaba                        ---      ---      65.0     ---
HSBC Markets                  0.3%     ---      64.5     ---
Hugh Johnson Advisors         ---      ---      66.0     ---
IDEAglobal                    ---     -3.8%     61.0     ---
IHS Global Insight            ---      ---      68.0     ---
Informa Global Markets        ---      ---      62.0     ---
ING Financial Markets        -0.4%    -3.4%     65.5       22
Insight Economics             ---     -3.2%     65.0     ---
Intesa-SanPaulo               ---      ---      65.0     ---
J.P. Morgan Chase            -0.6%    -3.6%     64.5     ---
Janney Montgomery Scott      -1.3%    -3.5%     63.0     ---
Jefferies & Co.               ---      ---      62.0     ---
Landesbank Berlin             ---      ---      65.5     ---
Manulife Asset Management     ---      ---      64.0     ---
MF Global                    -0.8%    -3.8%     61.5     ---
Moody’s Analytics             ---      ---      65.7     ---
Morgan Stanley & Co.          ---      ---      65.0     ---
National Bank Financial       ---      ---      65.0     ---
Natixis                       ---     -3.3%     65.0     ---
Newedge                       ---      ---      65.0     ---
Nomura Securities             ---     -4.0%     ---      ---
Parthenon Group              -0.2%    -3.1%     63.4     ---
Pierpont Securities           ---      ---      66.0     ---
PineBridge Investments       -0.5%     ---      66.0       18
Raiffeisenbank International  ---      ---      62.0     ---
RBC Capital Markets           ---      ---      64.5     ---
RBS Securities Inc.           ---      ---      63.5     ---
Scotia Capital                ---     -3.0%     ---        20
Societe Generale              0.0%     ---      67.0     ---
State Street Global Markets  -0.3%    -3.3%     64.8       21
Stone & McCarthy Research     ---      ---      65.0     ---
TD Securities                -0.3%     ---      65.0     ---
UBS                          -1.0%     ---      65.5     ---
UniCredit Research            ---     -3.0%     66.0     ---
Union Investment              ---      ---      63.4     ---
University of Maryland       -1.0%    -3.2%     62.0     ---
Wells Fargo & Co.             ---      ---      64.5     ---
WestLB AG                    -0.3%    -2.5%     64.5     ---
Westpac Banking Co.           ---      ---      63.0       20
Wrightson ICAP               -0.4%     ---      65.0       20
==============================================================

To contact the reporter on this story: Alex Kowalski in Washington at akowalski13@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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