AppraisalNEWSCAST.com

Kan, Joel; Sorohan, Mike
Two reports on housing prices yesterday showed slight increases, while a key gauge of consumer confidence continued to show catuious improvement.

The Federal Housing Finance Agency said U.S. house prices rose 0.7 percent on a seasonally adjusted basis in November from the previous month. FHFA’s monthly purchase-only House Price Index also showed house prices rose by 0.5 percent on a year-over-year basis.

Despite the increase, U.S. house prices remain well below their April 2007 peak, when prices averaged 10.3 percent higher. October’s previously reported 0.6 percent increase was revised downward to a 0.4 percent increase. On a year-over-year basis.

Regionally, the Pacific region showed a 2.3 percent increase from the previous month and a 2.9 percent increase from the same month last year. The next largest increase was the South Atlantic region with a 2.0 percent increase from the previous month, although this was down by 0.1 percent from a year ago. The East South Central region had the largest decrease, showing an 0.4 percent decrease in house prices, although this was still 1.5 percent higher than a year ago. The New England region was next with a 0.3 percent decrease, and this was 0.3 percent higher than the same month last year.

In other house price news, the Standard & Poor’s Case Shiller Home Price Indices showed mixed results. On a seasonally adjusted basis, the 10-City Index declined by 0.2 percent in November after remaining unchanged in October, while the 20-City Index showed a monthly increase of 0.2 percent, following a 0.3 percent increase in October. On a year-over-year basis, the 10-City Index declined by 4.5 percent from November 2008, while the 20-City Index declined by 5.3 percent from November 2008.

This represented the 10th month of improved readings, beginning in early 2009, and is the third consecutive month in which the decreases have been in the single digits. This follows 20 consecutive months of double digit declines in both indexes.

Charlotte, Las Vegas, Seattle and Tampa posted new lows as measured by the past four years, and any gains they might have seen in recent months have been erased; November is now considered their current low. On the other hand, Los Angeles, Phoenix, San Diego and San Francisco have seen prices increase for at least six consecutive months. Based on the annual data, Dallas, Denver, San Diego and San Francisco have entered positive territory, a result not seen in at least two years in most markets.

Finally, the Conference Board Consumer Confidence Index, which had increased in December, improved further in January. The Index now stands at 55.9, up from 53.6 in December. The Present Situation Index increased to 25.0 from 20.2. The Expectations Index increased to 76.5 from 75.9 last month.

Lynn Franco, director of the Conference Board Consumer Research Center, cautioned that outlook and reality could have different meanings.

“Consumers’ short-term outlook, while moderately more positive, does not suggest any significant pickup in activity in the coming months,” Franco said. “Regarding their financial situation, while consumers were less dire about their income prospects than in December, the number of pessimists continues to outnumber the optimists.”

Consumers’ assessment of present-day conditions was, on the whole, more positive than last month. Those stating business conditions are “good” increased to 9.0 percent from 7.5 percent, however, those stating business conditions are “bad” increased to 46.1 percent from 45.7 percent. Consumers’ assessment of the labor market improved moderately. Those claiming jobs are “hard to get” declined to 47.4 percent from 48.1 percent, while those claiming jobs are “plentiful” increased to 4.3 percent from 3.1 percent.

The Conference Board said consumers’ short-term outlook, while overall more positive, was somewhat mixed. The percentage of consumers expecting an improvement in business conditions over the next six months decreased to 20.9 percent from 21.2 percent, while those anticipating conditions will worsen increased to 12.7 percent from 11.8 percent. Regarding the outlook for the labor market, those expecting fewer jobs decreased to 18.9 percent from 20.6 percent. However, those expecting more jobs to become available in the months ahead declined to 15.5 percent from 16.4 percent. The proportion of consumers anticipating a decrease in their incomes declined to 16.2 percent from 18.4 percent.

(Joel Kan is associate director of research and business development with the Mortgage Bankers Association. He can be reached at jkan@mortgagebankers.org.)