Home Prices in U.S. Cities Probably Fell in July From Year Ago

Home prices in the U.S. probably declined in July from a year earlier, depressed by an imbalance between supply and demand that shows little sign of easing, economists said before a report today.

The S&P/Case-Shiller index of property values in 20 cities fell 4.4 percent from July 2010, the 10th consecutive year-to- year drop, according to the median forecast of 27 economists surveyed by Bloomberg News. Another report may show consumer confidence held in September near a two-year low.

Unemployment, stagnant wages and falling stock prices may keep weighing on sentiment, prompting homebuyers to hold off just as foreclosures swell the number of properties on the market. The housing slump was among dangers that prompted the Federal Reserve to take additional steps last week to prevent the world’s largest economy from sliding back into a recession.

“The risks are on the downside for U.S. home prices given the overhang of unsold homes and the weakness in the labor market,” said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto. “Foreclosure rates remain high, and that will likely put downward pressure on prices.”

The data from S&P/Case-Shiller are due at 9 a.m. New York time. Economists’ estimates ranged from declines of 5.5 percent to 4 percent.

The report may also show the market is bouncing along the bottom rather than deteriorating further. Prices may have risen 0.1 percent from the prior month following a 0.06 percent decline in June, according to economists’ forecasts.

Little Confidence

A 10 a.m. report from the New York-based Conference Board may show its consumer confidence index rose to 46 in September from 44.5 the prior month, according to the median forecast of economists surveyed. August’s level was the lowest since April 2009, when the economy was still in the recession.

Home sales remain in the doldrums. Purchases of new houses fell in August to a six-month low, figures from the Commerce Department showed yesterday.

Purchases of previously owned homes rose to a five-month high, boosted by demand of low-priced, distressed houses, the National Association of Realtors said Sept. 21. Sales of existing properties have averaged a 4.97 million annual pace this year, compared with the 7.25 million peak reached in September 2005.

“The U.S. housing market remains under stress,” Frank Blake, chairman and chief executive officer at Home Depot Inc. (HD), the biggest home-improvement retailer, said on an Aug. 16 teleconference with analysts. “We do not expect any meaningful improvement in the housing market for the back half of 2011, and events here and across the globe would suggest that there are more risks to the downside than the upside.”

Shares Slump

Builder shares have underperformed the overall market, reflecting the protracted industry slump. The Standard & Poor’s Supercomposite Homebuilding Index has dropped 28 percent so far this year compared with a 7.5 decrease in the S&P 500.

More distressed properties may soon come on the market, adding to the pressure on prices. Default notices sent to delinquent U.S. homeowners surged 33 percent in August from the previous month, a sign that lenders are speeding up the foreclosure process after almost a year of delays, RealtyTrac Inc. said Sept. 15.

Fed policy makers last week announced more steps to spur growth and revive the residential real estate industry, which since 1982 has aided every economic recovery except the current one. In a move aimed at lowering borrowing costs, the Fed said it will buy $400 billion of bonds with maturities of six to 30 years through June, while selling an equal amount of debt maturing in three years or less.

The central bank said it will also reinvest maturing mortgage debt into mortgage-backed securities instead of Treasuries in an attempt to spur housing and refinancing.

“There are significant downside risks to the economic outlook, including strains in global financial markets,” the Fed said in a statement on Sept. 21 after its two-day meeting. “The housing sector remains depressed,” and there is “continuing weakness in overall labor market conditions.”

                        Bloomberg Survey

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

Date of Release              09/27    09/27    09/27
Observation Period            July     July    Sept.
-----------------------------------------------------
Median                        0.1%    -4.4%     46.0
Average                       0.1%    -4.5%     46.0
High Forecast                 0.5%    -4.0%     49.0
Low Forecast                 -0.5%    -5.5%     40.0
Number of Participants          25       27       74
Previous                     -0.06%   -4.5%     44.5
-----------------------------------------------------
4CAST                         ---     -4.4%     46.0
ABN Amro                      0.1%     ---      46.0
Action Economics              ---      ---      45.0
Aletti Gestielle              ---      ---      46.0
Ameriprise Financial          ---      ---      46.0
Banesto                       ---     -4.7%     46.8
Bantleon Bank AG              ---      ---      45.8
Barclays Capital              0.0%    -4.5%     45.0
Bayerische Landesbank         ---     -4.5%     46.5
BBVA                          ---     -4.3%     48.0
BMO Capital Markets           ---     -4.5%     47.0
BNP Paribas                   ---      ---      40.0
BofA Merrill Lynch            ---      ---      47.0
Briefing.com                  ---     -4.5%     45.0
Capital Economics            -0.1%    -4.6%     47.0
Citi                          ---      ---      46.0
ClearView Economics           0.1%     ---      46.0
Credit Agricole               ---      ---      47.0
Credit Suisse                -0.1%    -4.6%     44.0
Danske Bank                   ---      ---      45.0
DekaBank                      ---      ---      46.0
Deutsche Bank Securities      ---      ---      40.0
Deutsche Postbank AG          ---      ---      46.0
DZ Bank                       ---     -5.5%     45.0
Exane                         ---      ---      46.5
Fact & Opinion Economics      ---     -4.4%     43.0
First Trust Advisors          ---      ---      45.9
FTN Financial                 ---      ---      46.0
Goldman, Sachs & Co.          0.2%     ---      46.0
Helaba                        ---      ---      46.0
High Frequency Economics      0.0%     ---      44.0
HSBC Markets                  0.5%    -4.0%     48.0
Hugh Johnson Advisors         ---      ---      45.0
IDEAglobal                    ---     -4.4%     49.0
Informa Global Markets        ---      ---      47.0
ING Financial Markets         0.2%    -4.4%     48.0
Intesa-SanPaulo               ---      ---      46.5
J.P. Morgan Chase             0.3%    -4.2%     46.5
Janney Montgomery Scott       0.1%    -4.8%     48.0
Landesbank Berlin             ---      ---      47.0
Landesbank BW                 ---      ---      45.0
Manulife Asset Management     ---      ---      45.0
Maria Fiorini Ramirez         ---      ---      46.0
MF Global                     0.3%    -4.1%     47.5
Moody’s Analytics             ---      ---      45.7
Morgan Stanley & Co.          ---      ---      48.0
National Bank Financial       ---      ---      44.5
Natixis                       ---     -4.3%     44.5
Nomura Securities             ---     -4.2%     45.9
Nord/LB                       ---      ---      46.0
Parthenon Group              -0.1%     ---      46.2
Pierian Capital               0.1%    -4.7%     43.5
Pierpont Securities           ---      ---      47.5
PineBridge Investments        0.2%     ---      44.0
PNC Bank                      ---      ---      45.0
Raiffeisenbank International  ---      ---      42.0
Raymond James                 0.1%    -4.4%     46.5
RBC Capital Markets           ---      ---      48.0
RBS Securities                ---      ---      45.0
Scotia Capital               -0.1%     ---      46.0
SMBC Nikko Securities         0.0%     ---      47.0
Societe Generale              0.5%     ---      46.5
Standard Chartered            ---     -4.6%     48.0
State Street Global Markets   0.2%    -4.3%     45.8
Stone & McCarthy Research     ---      ---      46.0
TD Securities                 0.5%    -4.3%     48.0
UBS                           0.1%    -4.4%     45.5
UniCredit Research            ---     -4.2%     48.0
Union Investment              ---      ---      46.0
University of Maryland       -0.5%    -5.0%     44.5
Wells Fargo & Co.             ---      ---      46.7
WestLB AG                     0.1%     ---      48.0
Westpac Banking Co.           ---      ---      47.0
Wrightson ICAP                0.2%     ---      48.0
=====================================================

To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net

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

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