U.S. Home Prices Probably Fell at Slower Rate

Home prices in 20 U.S. cities probably fell at a slower pace in the year to November, pointing to limited improvement in the residential real estate market, economists said before reports today.

The S&P/Case-Shiller index of property values in 20 cities dropped 3.3 percent from November 2010, the smallest decline in 10 months, after decreasing 3.4 percent in the year ended in October, according to the median forecast of 30 economists surveyed by Bloomberg News. Consumer confidence in January climbed to the highest level since February 2011, another report may show.

More stable home prices may help persuade Americans to take advantage of record-low mortgage rates, supporting the industry that precipitated the last recession. At the same time, the recovery in housing may be slow to develop as foreclosures put more properties onto the market.

“There’s still a lot of uncertainty about what kind of gains there will be for home prices over the next couple of years,” said Michelle Meyer, a senior U.S. economist at Bank of America Corp. in New York. “In the near term, home prices will see a modest drop, but once market clears the foreclosures, a nice rebound will start to kick in.”

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 3.9 percent to 2 percent.

Home prices, after adjusting for seasonal variations, fell 0.5 percent in November from the prior month, according to the Bloomberg survey median.

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.

Jobs and Income

Falling joblessness and rising incomes have made Americans more optimistic, which may spur demand and help stabilize prices. In December, the unemployment rate fell to an almost three-year low of 8.5 percent, Labor Department figures said Jan. 6. Personal incomes climbed 0.5 percent last month, the most since March, the Commerce Department said yesterday.

The New York-based Conference Board’s consumer confidence gauge, due at 10 a.m., probably rose to 68 this month from 64.5 in December, the Bloomberg survey median shows.

Builders have become more upbeat about the housing market. The National Association of Home Builders/Wells Fargo sentiment index rose this month to the highest level since June 2007 as sales and buyer traffic improved.

‘Renewed’ Confidence

“We turn our attention to the spring selling season with a renewed sense of optimism, not only because of our own improving trends but also because of the favorable signs we see in the economy, new and existing home level inventory, employment, affordability and consumer confidence as it impacts our business,” Larry T. Nicholson, chief executive officer of Ryland Group Inc. (RYL), said during a Jan. 27 conference call.

The Westlake Village, California-based company builds homes with an average price of $255,000 in 13 states. Orders climbed 24 percent in the fourth quarter from the same three months a year earlier.

Builder shares have improved as the market stabilized. The Standard & Poor’s Supercomposite Homebuilder Index of 12 builders including Ryland and Lennar Corp. has surged 51 percent since the end of the third quarter, compared with a 16 percent increase for the broader S&P 500 Index.

Nonetheless, a rebound in the inventory of unsold homes could hinder progress. Banks may seize more than 1 million houses in 2012 after legal scrutiny of foreclosure practices slowed actions against delinquent property owners in 2011, RealtyTrac Inc., an Irvine, California-based data seller, said Jan. 12.

                        Bloomberg Survey

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

Date of Release              01/31    01/31    01/31
Observation Period            Nov.     Jan.     Jan.
----------------------------------------------------
Median                       -3.3%     63.0     68.0
Average                      -3.2%     62.6     68.0
High Forecast                -2.0%     67.0     72.5
Low Forecast                 -3.9%     59.0     62.5
Number of Participants          30       57       73
Previous                     -3.4%     62.5     64.5
----------------------------------------------------
4CAST Ltd.                   -3.5%     63.5     69.0
ABN Amro Inc.                 ---      62.0     66.0
Action Economics              ---      63.0     70.0
Aletti Gestielle              ---      63.2     68.0
Ameriprise Financial Inc      ---      62.0     67.0
Analytical Synthesis         -3.4%     ---      ---
Banca Aletti & C spa          ---      61.0     68.0
Banesto                       ---      63.4     67.5
Bantleon Bank AG              ---      62.7     ---
Barclays Capital             -2.9%     62.0     68.5
Bayerische Landesbank         ---      ---      68.0
BMO Capital Markets          -2.9%     63.0     68.0
BNP Paribas                   ---      62.0     69.0
BofA Merrill Lynch Resear     ---      62.5     67.0
Briefing.com                 -2.0%     61.0     67.0
Capital Economics            -3.9%     ---      70.0
Citi                          ---      60.0     67.0
ClearView Economics           ---      62.0     66.0
Comerica Inc                  ---      ---      65.5
Commerzbank AG               -3.3%     62.5     68.0
Credit Agricole CIB           ---      63.2     67.0
Credit Suisse                -3.4%     ---      72.0
Daiwa Securities America      ---      ---      67.0
DekaBank                      ---      63.0     70.0
Desjardins Group             -3.3%     62.5     67.0
Deutsche Bank Securities      ---      63.0     70.0
Deutsche Postbank AG          ---      ---      68.5
DZ Bank                      -3.3%     63.2     67.0
Exane                        -3.2%     60.0     ---
Fact & Opinion Economics     -3.3%     62.7     72.5
First Trust Advisors          ---      64.6     70.3
FTN Financial                 ---      ---      70.5
Goldman, Sachs & Co.          ---      61.0     70.0
Helaba                        ---      63.0     68.0
Herrmann Forecasting LLC     -3.2%     64.0     68.4
High Frequency Economics      ---      61.0     68.0
HSBC Markets                 -3.1%     61.0     64.5
Hugh Johnson Advisors         ---      63.0     69.3
IDEAglobal                   -3.2%     65.0     68.0
IHS Global Insight           -3.4%     ---      68.0
Informa Global Markets        ---      63.0     67.5
ING Financial Markets        -3.4%     63.0     69.5
Insight Economics            -3.2%     63.5     69.0
Intesa Sanpaulo               ---      63.2     69.0
J.P. Morgan Chase            -3.3%     ---      66.5
Janney Montgomery Scott L    -3.4%     ---      67.0
Jefferies & Co.               ---      64.0     ---
Landesbank Berlin             ---      61.0     65.0
Landesbank BW                 ---      63.5     68.5
Maria Fiorini Ramirez Inc     ---      ---      68.0
Market Securities            -3.2%     ---      ---
Mizuho Securities             ---      64.0     67.0
Moody’s Analytics             ---      63.3     67.0
Morgan Stanley & Co.          ---      ---      68.0
National Bank Financial       ---      ---      66.0
Natixis                      -2.6%     ---      67.0
Nomura Securities Intl.      -3.7%     62.6     68.9
Nord/LB                       ---      61.5     ---
O’Sullivan                    ---      ---      69.0
Parthenon Group              -3.4%     59.0     67.8
Pierpont Securities LLC       ---      ---      68.0
PineBridge Investments        ---      64.0     67.5
PNC Bank                      ---      ---      62.5
Raiffeisenbank Internatio     ---      ---      66.6
Raymond James                 ---      61.5     67.8
RBC Capital Markets           ---      61.0     70.0
RBS Securities Inc.           ---      ---      70.0
Scotia Capital                ---      62.0     68.0
SMBC Nikko Securities        -3.3%     67.0     66.0
Societe Generale              ---      65.5     71.0
Standard Chartered           -3.2%     63.0     68.5
Stone & McCarthy Research     ---      65.7     67.0
TD Securities                -3.0%     62.0     69.0
UBS                          -3.4%     64.5     67.0
University of Maryland       -3.2%     63.1     68.0
Wells Fargo & Co.             ---      ---      67.8
WestLB AG                    -3.0%     63.1     68.1
Westpac Banking Co.           ---      60.0     67.5
Wrightson ICAP                ---      61.0     69.0
=====================================================

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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