Home Prices in 20 U.S. Cities Likely Fell at Slower Rate

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Realtor Lindsay Reihman, right, talks to potential homebuyers Chris Porter and Beth Purvis at the Ontario Road Flats condominiums in the Adams Morgan neighborhood of Washington, D.C., on March 25, 2012. Close

Realtor Lindsay Reihman, right, talks to potential homebuyers Chris Porter and Beth... Read More

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Photographer: Andrew Harrer/Bloomberg

Realtor Lindsay Reihman, right, talks to potential homebuyers Chris Porter and Beth Purvis at the Ontario Road Flats condominiums in the Adams Morgan neighborhood of Washington, D.C., on March 25, 2012.

Home prices in 20 U.S. cities probably fell at a slower pace in the year to January, another sign of stabilization in the residential real estate market, economists said before a report today.

The S&P/Case-Shiller index of property values in 20 cities dropped 3.8 percent from January 2011, the smallest decline in three months, after decreasing 4 percent in the previous 12 months, according to the median forecast of 32 economists surveyed by Bloomberg News. Consumer confidence in March fell as gas prices climbed, another report may show.

Property values are steadying as an improving job market helps underpin home sales, allowing the industry that precipitated the last recession to contribute to growth this year. Nonetheless, the recovery in housing may be restrained by foreclosures that are putting more properties onto the market.

“We’re seeing some signs of stabilization in the housing market,” said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts. “Better employment is one of the things that is absolutely essential for housing activity to improve. We’re starting to see that.”

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 3.3 percent to 4.5 percent.

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Sunlight is reflected off of a residential building. Close

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Sunlight is reflected off of a residential building.

Home prices, after adjusting for seasonal variations, fell 0.3 percent in January from the prior month, according to the Bloomberg survey median. That would be the smallest decline in six months.

Better Gauge

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.

Employment growth and rising incomes have made Americans more optimistic, which may spur demand and help stabilize prices. In February, the unemployment rate held at a three-year low of 8.3 percent, while payroll gains capped the best six- month run since 2006, according to Labor Department figures.

Builders have become more upbeat about the housing market. The National Association of Home Builders/Wells Fargo sentiment index in March held at the highest level since June 2007 as the sales outlook climbed for a sixth straight month.

Builder shares have improved as the market stabilized. The Standard & Poor’s Supercomposite Homebuilder Index of 12 builders including Ryland Group Inc. and Lennar Corp. has climbed 24 percent since the end of last year, compared with a 13 percent increase for the broader S&P 500 Index.

Bernanke’s View

Fed Chairman Ben S. Bernanke yesterday said that while he’s encouraged by the decline in unemployment, the central bank still needs to keep interest rates low to make further progress.

Recent “better news” on the economy has also included a “slight bit of encouraging news here and there in the housing market” and strength in manufacturing, Bernanke said in response to audience questions following a speech in Arlington, Virginia.

Still, higher gas prices are weighing on household sentiment. The New York-based Conference Board’s consumer confidence gauge, due at 10 a.m., probably fell to 70.1 this month from a one-year high of 70.8 in February, the Bloomberg survey median shows.

The price of a gallon of regular unleaded gas was $3.90 on March 25, up 62 cents since the end of last year, according to AAA, the nation’s largest automobile association. Paying more at the pump may limit consumer spending on other items.

Companies such as Darden Restaurants Inc. (DRI), operator of the Red Lobster, Olive Garden and LongHorn Steakhouse chains, say they’re already seeing cutbacks.

“Consumer sentiment today is mixed with decent job news, but that’s offset certainly by a spike up in gas and food prices,” Clarence Otis, chairman and chief executive officer of the Orlando, Florida-based firm, said on a March 23 conference call. “If you look at today’s environment across the industry, it is somewhat weaker than it was during the holiday and immediate post-holiday period.”

                     Bloomberg Survey

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

Date of Release              03/27    03/27    03/27
Observation Period            Jan.     Jan.    March
------------------------------------------------------
Median                       -0.3%    -3.8%     70.1
Average                      -0.2%    -3.8%     70.5
High Forecast                 0.2%    -3.3%     77.0
Low Forecast                 -0.5%    -4.5%     66.0
Number of Participants          23       32       78
Previous                     -0.5%    -4.0%     70.8
------------------------------------------------------
4CAST                         ---     -3.8%     66.0
ABN Amro                     -0.3%     ---      68.0
Action Economics              ---      ---      71.0
Aletti Gestielle              ---      ---      69.0
Ameriprise Financial          ---      ---      71.5
Analytical Synthesis         -0.4%    -3.4%     ---
Banca Aletti                  ---      ---      72.0
Banesto                       ---     -3.3%     69.2
Bank of Tokyo- Mitsubishi     ---      ---      72.5
Barclays Capital             -0.4%    -3.8%     67.0
Bayerische Landesbank         ---      ---      70.0
BBVA                          ---     -3.6%     70.5
BMO Capital Markets          -0.1%    -3.8%     70.8
BNP Paribas                   ---      ---      68.0
BofA Merrill Lynch            ---     -4.1%     69.5
Briefing.com                  ---     -4.0%     71.0
Capital Economics             ---      ---      72.0
Citi                          ---      ---      72.0
ClearView Economics           0.1%     ---      70.0
Comerica                      ---      ---      69.0
Commerzbank AG                ---     -4.0%     70.0
Credit Agricole CIB           ---      ---      70.2
Credit Suisse                -0.1%    -3.9%     70.0
Daiwa Securities America      ---      ---      70.0
Danske Bank                   ---      ---      69.5
DekaBank                     -0.4%    -3.8%     73.0
Desjardins Group              ---     -4.2%     69.5
Deutsche Bank Securities     -0.4%     ---      75.0
Deutsche Postbank AG          ---      ---      74.0
DZ Bank                       ---     -3.8%     69.0
Exane                         ---      ---      70.0
Fact & Opinion Economics      ---     -3.8%     75.0
First Trust Advisors          ---      ---      70.0
FTN Financial                 ---      ---      69.0
Helaba                        ---      ---      71.0
High Frequency Economics     -0.3%     ---      67.0
HSBC Markets                 -0.3%    -4.1%     70.0
Hugh Johnson Advisors         ---      ---      66.0
IDEAglobal                    ---     -3.8%     70.0
IHS Global Insight           -0.5%    -4.3%     73.3
Informa Global Markets        ---      ---      69.5
ING Financial Markets         0.0%    -3.6%     69.0
Insight Economics             ---     -4.2%     70.0
Intesa Sanpaulo               ---      ---      68.0
J.P. Morgan Chase            -0.4%    -3.8%     71.5
Janney Montgomery Scott      -0.5%    -3.4%     72.5
Jefferies & Co.               ---      ---      67.0
Landesbank Berlin             ---      ---      74.0
Landesbank BW                 ---      ---      70.5
Market Securities             ---     -3.7%     ---
Moody’s Analytics             ---      ---      69.3
Morgan Stanley & Co.          ---      ---      68.0
National Bank Financial       ---      ---      70.0
Natixis                       ---     -3.6%     71.0
Nomura Securities             ---     -3.6%     71.8
Nord/LB                       ---      ---      71.0
O’Sullivan                   -0.3%     ---      72.5
Parthenon Group              -0.2%    -3.7%     69.5
Pierpont Securities           ---      ---      69.0
PineBridge Investments        0.2%     ---      72.0
PNC Bank                      ---      ---      68.0
Raiffeisenbank International  ---      ---      69.0
Raymond James                 ---      ---      73.0
RBC Capital Markets           ---      ---      73.4
RBS Securities                ---      ---      70.8
Scotia Capital                ---      ---      69.9
Second Order Strategies       ---     -3.3%     ---
SMBC Nikko Securities        -0.2%    -3.9%     68.0
Societe Generale              0.0%     ---      77.0
Standard & Poor’s             ---      ---      71.0
Standard Chartered            ---     -4.5%     71.0
Stone & McCarthy Research     ---      ---      70.6
TD Securities                -0.3%     ---      69.0
UBS                          -0.2%    -4.0%     71.0
UniCredit Research            ---     -3.7%     71.0
Union Investment              ---      ---      70.3
University of Maryland       -0.3%    -4.1%     71.0
Wells Fargo & Co.             ---      ---      72.6
WestLB AG                     ---     -3.8%     70.5
Westpac Banking Co.           ---      ---      71.5
Wrightson ICAP               -0.3%     ---      70.0
======================================================

To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

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

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