housing market

Jobs and Housing Reports Show Resilience in Recovery

January 17, 2013 by NewsMaker Leave a Comment

The reports on Thursday showed the economy was weathering an uncertain fiscal environment surprisingly well. Still, growth in the fourth quarter was most likely subdued, and only a modest pickup was expected in the first three months of this year.

“While growth has been slow, the damage done from the uncertainty surrounding the fiscal cliff was not sufficient to topple the recovery,” said Millan Mulraine, a senior economist at TD Securities in New York.

The fiscal cliff refers to deep government spending cuts and tax increases, many of which were avoided after a last-minute agreement in Congress. A fight over raising the government’s borrowing limit looms.

Initial claims for state unemployment benefits fell 37,000 to a seasonally adjusted 335,000, the lowest level since January 2008, the Labor Department said on Thursday. It was the largest weekly drop since February 2010, ending four straight weeks of increases.

While problems adjusting the data for seasonal fluctuations might have exaggerated the size of the decline, economists said the report still suggested an improvement in the labor market and the economy as a whole.

“Having taken a pinch of salt, however, we would suggest that the trend in claims generally show no pickup in layoff activity around the turn of the year,” said John Ryding, chief economist at RDQ Economics in New York.

A separate report from the Commerce Department showed housing starts jumped 12.1 percent last month to their highest level since June 2008. Permits for home construction were also the highest in about 4 1/2 years.

The data was confirmation that the housing market was improving, aided in part by favorable weather, with gains in home building across all four regions in the survey. Groundbreaking increased for both single-family homes and multifamily units.

Housing appeared to no longer be a drag on the economy and residential construction was expected to have contributed to growth last year for the first time since 2005.

The jobs and housing data helped United States stocks surge. The reports came on the heels of data this week showing solid retail sales and manufacturing growth in December.

Still, the outlook for the economy remains shaky. A report showed that factory activity in the mid-Atlantic region had contracted this month as new orders tumbled, pointing to a cooling in manufacturing activity.

The Philadelphia Federal Reserve Bank said its business activity index fell to minus 5.8 from minus 4.6 in December. A reading below zero indicates contraction in manufacturing in eastern Pennsylvania, southern New Jersey and Delaware.

“Manufacturing has slowed but it’s still growing,” said Gus Faucher, a senior economist at PNC Financial Services in Pittsburgh. “I’m not going to read too much into this until I see other regional surveys.

Article source: http://www.nytimes.com/2013/01/18/business/economy/claims-for-jobless-benefits-drop.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: housing market, pinch of salt, td securities

October Home Prices Rose In Positive Sign for Markets

December 27, 2012 by NewsMaker Leave a Comment

WASHINGTON (AP) — Home prices were up in most major metropolitan areas in October from a year earlier, pushed up by rising sales and a decline in the supply of available homes. Higher prices show the housing market is improving as it moves into the slow fall and winter sales period.

The Standard Poor’s/Case-Shiller national home price index released Wednesday showed that prices increased 4.3 percent from October 2011, the largest year-over-year increase in two and a half years, when a home buyer tax credit temporarily increased sales.

Prices rose in October 2012 from a year earlier in 18 of 20 cities. Phoenix led all cities with a 21.7 percent gain, followed by Detroit, where prices increased 10 percent. Prices declined in Chicago and New York.

Home prices fell in 12 of 20 cities in October compared with September. Monthly prices are not seasonally adjusted, so the decreases reflect the end of the peak buying season.

Still, the broader trend is encouraging. October was the fifth straight month of year-over-year gains, after nearly two years of declines. Prices rose in mid-2010 in the final months before the tax credit expired. They had fallen sharply in 2008 and 2009.

“It is clear that the housing recovery is gaining strength,” said David M. Blitzer, chairman of the index committee at SP Dow Jones Indexes.

The improvement in housing is adding to economic growth and most analysts expect that to continue in 2013, assuming that the White House and Congress can reach a deal to avert economic damage from sharp tax increases and government spending cuts set to take effect on Jan. 1.

“We expect home price appreciation to continue for the foreseeable future, because inventories are lean amid rising sales,” said Joseph LaVorgna, chief United States economist at Deutsche Bank. “This assumes that a resolution to the fiscal cliff is found,” he said. “Otherwise, the recent positive trend in housing would most certainly be in jeopardy along with the rest of the current economic expansion.”

Prices nationwide have recovered to about the same level as in the fall of 2003, according to the Case-Shiller index. They remain about 30 percent below the peak reached in the summer of 2006.

The pace of home construction slipped in November but was still nearly 22 percent higher than a year earlier. Builders are on track this year to start work on the largest number of homes in four years.

Builder confidence rose in December for a seventh straight month to the highest level in more than 6 1/2 years, according to a survey released last week by the National Association of Home Builders/Wells Fargo.

Article source: http://www.nytimes.com/2012/12/27/business/economy/home-price-index-rose-in-october.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: housing market, inventories, metropolitan areas

Marvin Windows and Doors Offers Workers Profit-Sharing Checks

December 21, 2012 by NewsMaker Leave a Comment

On Friday, the company gave employees their first profit-sharing checks in four years, plus a ham. While the checks were relatively modest — $799,379 was split among 2,573 employees, an average of $311 for each employee — company officials said it was a sign that the worst of the crisis may be over.

“I think everyone believes that we are in the midst of a recovery, albeit a slow and painful one,” said John Kirchner, a company spokesman.

During the presidential campaign, President Obama referred to Marvin on several occasions as an example of a company that valued its employees over profits. Instead of laying off workers, Marvin officials cut back hours for hourly workers, eliminated some perks and cut pay for salaried employees, including executives and family members, with the goal of breaking even until the economy improved.

In his acceptance speech at the Democratic National Convention, President Obama noted that Marvin did not lay off any of its employees when the recession hit “even when their competitors shut down dozens of plants, even when it meant the owner gave up some perks and some pay because they understood that their biggest asset was the community and the workers who had helped build that business — they give me hope.”

Ironically, Marvin’s top executives are Republicans and reliable contributors to Republican presidential campaigns. The company’s president, Susan Marvin, endorsed Mitt Romney at a rally with his running mate, Paul Ryan. In November, before the election, Mr. Romney visited a Marvin plant in Virginia.

“During a time when the housing market was in such distress, for them to be able to maintain their business and maintain their employee base is an extraordinary thing,” Mr. Romney said, according to local news reports.

In an interview last year, several members of the Marvin family said the no-layoff policy was a long-term business strategy that they thought would give them a competitive advantage by retaining experienced workers when its competitors were shedding them. In addition, they said it would keep its hometown Warroad, Minn., vibrant at a time when others were being hard hit by unemployment.

“If we would have cut 1,000 people in early 2009, it would have had a devastating impact on the community,” Jake Marvin, the chief executive, said in an interview on Friday.

The profit-sharing checks were delivered at the company’s annual meeting, held in a hockey arena in Warroad, which is known as much for its hockey teams and walleye fishing as its sprawling windows plant. It was 3 degrees when the meeting began.

The size of the profit-sharing checks depended on an employee’s job and years of service, he said. (Marvin employs 2,000 or so other employees who work for different brands and operate as separate businesses).

Kathy Fast, who has worked for Marvin for 55 years, said she was surprised when she received an envelope containing a green piece of paper, the deposit slip showing her share of the profits.

“I wasn’t expecting that,” said Ms. Fast, who is 76 and has worked in accounts receivable during her entire tenure at Marvin. “That is great.” She declined to say how much she received.

Article source: http://www.nytimes.com/2012/12/22/business/marvin-windows-and-doors-offers-workers-profit-sharing-checks.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: acceptance speech, extraordinary thing, housing market

Financiers Bet on Rental Housing

December 8, 2012 by NewsMaker Leave a Comment

It is February 2010. The anger behind Occupy Wall Street is building. Flicking through slides, Mr. Miller, a Treasury official working with the department’s $700 billion Troubled Asset Relief Program, lays out what caused the housing bubble: easy credit, shoddy banking, feeble regulation, and on and on.

“History has demonstrated that the financial system over all — not every piece of it, but over all — is a force for good, even if it goes off track from time to time,” Mr. Miller tells a symposium at Columbia University in remarks posted on YouTube. “As we’ve experienced, sometimes this system breaks down.”

But, it turns out, sometimes when the system breaks down, there is money to be made.

Mr. Miller, who arrived at the Treasury after working at Goldman Sachs, described himself as a “recovering banker” in the video.

Today, he has slipped back through the revolving door between Washington and Wall Street. This time, he has gone the other way, in a new company, Silver Bay Realty, which is about to go public. He is back in the investment game and out to make money with a play that was at the center of the financial crisis: American housing.

As the foreclosure crisis grinds on, knowledgeable, cash-rich investors are doing something that still gives many ordinary Americans pause: they are leaping headlong into the housing market. And not just into tricky mortgage investments, collateralized this or securitized that, but actual houses.

A flurry of private-equity giants and hedge funds have spent billions of dollars to buy thousands of foreclosed single-family homes. They are purchasing them on the cheap through bank auctions, multiple listing services, short sales and bulk purchases from local investors in need of cash, with plans to fix up the properties, rent them out and watch their values soar as the industry rebounds. They have raised as much as $8 billion to invest, according to Jade Rahmani, an analyst at Keefe Bruyette Woods.

The Blackstone Group, the New York private-equity firm run by Stephen A. Schwarzman, has spent more than $1 billion to buy 6,500 single-family homes so far this year. The Colony Capital Group, headed by the Los Angeles billionaire Thomas J. Barrack Jr., has bought 4,000.

Perhaps no investment company is staking more on this strategy, and asking stock-market investors to do the same, than the one Mr. Miller is involved with, Silver Bay Realty Trust of Minnetonka, Minn. Silver Bay is the brainchild of Two Harbors Investment, a publicly traded mortgage real estate investment trust that invests in securities backed by home mortgages.

In January, Two Harbors branched out into buying actual homes and placed them in a unit called Silver Bay. It offered few details at the time, leaving analysts guessing about where it was headed.

“They were not very forthcoming,” says Merrill Ross, an analyst at Wunderlich Securities. As of Dec. 4, Two Harbors had acquired 2,200 houses. Ms. Ross says she couldn’t find out how much Two Harbors paid or the rents it was charging. Two Harbors shares, which recently traded at $11.66, are up about 25 percent in 2012.

Two Harbors now plans to spin off Silver Bay into a separately traded public REIT. The new company will combine Silver Bay’s portfolio with Provident Real Estate Advisors’ 880-property portfolio. Silver Bay will focus on homes in Arizona, California, Florida, Georgia, North Carolina and Nevada, states where prices fell hard when the bottom dropped out.

In a filing with the Securities and Exchange Commission last week, Silver Bay said it planned to offer 13.25 million shares at an initial price of $18 to $20 a share. But it’s no slam dunk. While home prices nationwide have begun to recover — they were up 6.3 percent in October, according to a report last week from CoreLogic, a data analysis firm — prices could fall again if the economy falters anew. Millions of Americans are still struggling to hold onto their homes and avoid foreclosure.

“Recent turbulence in U.S. housing and mortgage markets has created a unique opportunity,” Silver Bay said in an S.E.C. filing. The company, which will be the first publicly traded REIT to invest solely in single-family rental homes, says its investment plan will help clear foreclosed homes from the market, spruce up neighborhoods and renovate vacant homes, presumably while enriching its new shareholders. Its portfolio will be managed by Pine River Capital Management, a hedge fund in Minnetonka that has reportedly been buying bonds backed by risky subprime mortgages. Mr. Miller is a managing director at Pine River and chief executive of Silver Bay.

Mr. Miller, through a spokesman, declined to comment for this article, citing the pending stock offering.

Article source: http://www.nytimes.com/2012/12/09/business/financiers-bet-on-rental-housing.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: hedge funds, housing market, private equity

Nation’s Home Prices Rose 2% in August

October 31, 2012 by NewsMaker Leave a Comment

WASHINGTON (AP) — Home prices rose in August in nearly all American cities, and many of the markets hit hardest during the crisis are starting to show sustained gains. The increases were the latest evidence of a steady housing recovery.

The Standard Poor’s/Case-Shiller index that was released on Tuesday showed that national home prices increased 2 percent in August compared with a year earlier. This was the third straight increase and a faster pace than in July.

The report also said that prices rose in August from July in 19 of the 20 cities tracked by the index. Prices had risen in all 20 cities in the previous three months.

Cities that had experienced some of the worst price declines during the housing crisis are starting to come back. Prices in Las Vegas rose 0.9 percent, the first year-over-year gain since January 2007. Prices in Phoenix are 18.8 percent higher in August than a year earlier. Home values in Tampa and Miami have also posted solid increases over the period.

Seattle was the only city to report a monthly decline. Still, prices there fell just 0.1 percent in August from July and are 3.4 percent higher than a year earlier.

Prices in Atlanta have fallen 6.1 percent over the 12 months that ended in August, the largest year-over-year decline. But Atlanta has posted the largest price gain among the 20 cities over the last three months, according to Trulia, a housing analysis firm.

“The sustained good news in home prices over the past five months makes us optimistic for continued recovery in the housing market,” said David Blitzer, chairman of the Case-Shiller index.

The steady increase in prices has helped many home markets slowly rebound nearly six years after the housing bubble burst, lifted further by the lowest mortgage rates in decades.

The S. P./Case-Shiller index covers roughly half of American homes. It measures prices compared with those in January 2000 and creates a three-month moving average. The figures are not seasonally adjusted, so some August gains reflect the benefit of the summer buying season.

Stan Humphries, chief economist at the housing Web site Zillow.com, expects the monthly price figures will decline in the fall and winter. “This doesn’t mean the housing recovery has been derailed,” he said. “This is exactly what bouncing along the bottom looks like.”

Other recent reports, on construction and sales, have also shown an improving market, albeit from depressed levels.

Article source: http://www.nytimes.com/2012/10/31/business/economy/housing-price-index-rises.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: 12 months, housing bubble burst, housing market

DealBook: JPMorgan Quarterly Profit Rises 34%

October 12, 2012 by NewsMaker Leave a Comment

Yuri Gripas/ReutersJamie Dimon, the chief of JPMorgan Chase.

JPMorgan Chase on Friday reported a third-quarter profit of $5.7 billion, up 34 percent from a year ago, as the bank showed signs of strength in consumer and corporate lending.

The bank surpassed expectations with earnings of $1.40 a share, compared with $1.02 a year earlier. JPMorgan’s revenue rose to $25.9 billion, up 6 percent from 2011.

As the nation’s largest bank, JPMorgan is often considered a barometer of how rival institutions and the greater economy will fare. With growth across virtually all the bank’s core businesses, the earnings could bode well for the rest of the industry.

Economix Blog: The Fed’s Advice on the Housing Crisis

January 4, 2012 by NewsMaker Leave a Comment

The Federal Reserve tried Wednesday to stir interest among policy makers in the problems afflicting the housing market, sending a white paper to Congress outlining suggestions for easing those problems.

The paper makes two basic points:

1. There are no silver bullets.

2. It certainly would be helpful if Fannie Mae and Freddie Mac, which are controlled by the government, gave the health of the housing market greater priority than their own short-term financial condition.

The Fed is concerned that the collapse of mortgage lending during the financial crisis is hardening into “a potentially long-term downshift in the supply of mortgage credit.” One reason for this, the paper says, is that Fannie and Freddie, which provide the money for most mortgage loans, are scaring lenders by aggressively seeking refunds on defaulted loans.

The policy helps Fannie and Freddie “maximize their profits on old business and thus limits draws on the U.S. Treasury, but at the same time, it discourages lenders from originating new mortgages,” the paper says.

In a similar vein, the paper says that Fannie and Freddie — known as government-sponsored enterprises, or G.S.E.’s — have pushed to resell foreclosed properties even when converting properties into rental units makes more sense. The paper calculates that for two-fifths of the properties owned by Fannie Mae, renting could actually reduce its losses.

The paper also gives a tepid review of recent changes to the Home Affordable Refinance Program, which seeks to help homeowners refinance into more affordable loans, noting that “more might be done.”

“The structure of the HARP program highlights the tension between minimizing the G.S.E.’s’ exposure to potential losses and stabilizing the housing market,” said the paper, which was delivered Wednesday to the chairman and ranking member of the Senate Banking Committee.

The Federal Housing Finance Agency, which has guardianship of Fannie and Freddie, has said repeatedly that it is required by law to minimize their losses, which are borne by taxpayers and already exceed $150 billion. The paper suggests this mandate could be interpreted more broadly, as “some actions that cause greater losses to be sustained by the G.S.E.’s in the near term might be in the interest of taxpayers” in the long term. It does not take the other road of calling for Congress to change the law.

Indeed, the overall tone of the paper is cautious, playing down, for example, the potential benefits of principal reductions for owners whose mortgage debts exceed the value of their homes. In this sense, it falls solidly in line with the conventional wisdom in Washington that policy makers lack the power to lift the housing market from its deep depression.

“There is unfortunately no single solution for the problems the housing market faces,” the paper concludes. “Instead, progress will come only through persistent and careful efforts to address a range of difficult and interdependent issues.”

Just the kind of work that Congress is equipped to handle.

Article source: http://feeds.nytimes.com/click.phdo?i=5db411e5eac09c507097c59e40c8eca7

Filed Under: Economy News Tagged With: housing market, mortgage credit, silver bullets

High & Low Finance: Time to Accelerate the Housing Recovery

December 2, 2011 by NewsMaker Leave a Comment

It’s housing, stupid. More precisely, it’s housing finance.

As the Obama administration seeks ways to revive the economy, not to mention win an election, it is becoming clear that the biggest mistake officials made when they took office nearly three years ago was to underestimate the continuing damage to the economy from the mortgage crisis.

“There is widespread agreement among economists that housing debt is at the heart of the slow recovery,” said Kenneth Rogoff, the Harvard economist, “and that finding a way to bring it down faster would accelerate the recovery.”

The administration has sought to encourage mortgage modifications by making it easier for homeowners who owe more than their homes are worth to nonetheless refinance their mortgages. But the success of that effort seems to have been limited, and calls are growing for more action.

Interestingly, it is Federal Reserve officials, who normally seek to avoid commenting on specific government policies outside the range of monetary policies, who have been sounding the alarm with increasing regularity. They have made clear that they fear monetary policy will not be enough to get the economy moving, and that they need help from Congress and the White House.

“We at the Federal Reserve are moving vigorously to promote a stronger economic recovery,” said Janet Yellin, the Fed’s vice chairman, in a speech in San Francisco this week. “However, monetary policy is not a panacea, and it is essential for other policy makers to also do their part. In particular, there is a strong case for additional measures to address the dysfunctional housing market.”

William C. Dudley, the president of the Federal Reserve Bank of New York, laid out a housing agenda when he spoke at West Point last month. He said action was needed to make it easier for more people to qualify for mortgage loans, and also broached an idea for something that so far has gotten little political support but probably will be necessary: reducing the amount that many borrowers owe while letting them keep their homes.

He suggested that borrowers who were under water on their loans — that is, they owe more than their houses were worth — but were still making their payments should be able “to earn accelerated principal reduction over time.”

Any such plan risks infuriating homeowners who were responsible and did not borrow more than they could afford to pay. One way to improve the perceived fairness of a plan to allow principal reductions would be to tie such reductions to a structure that would give the lenders a share in any recovery in property values when the homes were eventually sold.

To many Republicans, the answer is simply to let the markets sort it out. That prescription seems to be based more on ideology than on any actual analysis of how the housing market is functioning, and it seems to infuriate Fed officials.

“Regardless of how we got here, we, as a nation, currently have a housing market that is so severely out of balance that it is hampering our economic recovery,” said Elizabeth A. Duke, a Fed governor, in a speech in September.

Mr. Dudley, the New York Fed president, also denounced the way the market was functioning. “In contrast to the efficient mechanisms in place in the commercial property market to work out troubled debt,” he said in his speech at West Point, “the infrastructure of the residential mortgage market is wholly inadequate to deal with a systemic shock to the housing market. Left alone, this flawed structure will destroy much more value in housing than is necessary.”

First impressions can be misleading, and nowhere is that more true than in understanding the housing mess. The first symptoms of trouble came in the subprime market, and it was the problems of that market that were first put under a microscope. We found loans that had been made to unqualified borrowers on terms that were, in some cases, outrageous. We found fraud. We found that credit had become far too easy to get.

And we found private-label mortgage securitizations that were stuffed with horrid loans that never should have been made, rubber-stamped by rating agencies, guaranteed by insurance companies and purchased by institutional investors without anyone in the chain doing any real due diligence. We found securitizations that were managed so haphazardly that papers proving who owns mortgages had disappeared.

Article source: http://feeds.nytimes.com/click.phdo?i=b4ef6b321481a7e95e76f804af8ce96c

Filed Under: Business News Tagged With: economic recovery, federal reserve bank, housing market

DealBook: Judge Rakoff Skeptical of S.E.C. Settlement With Citigroup

October 27, 2011 by NewsMaker Leave a Comment

Fred R. Conrad/The New York TimesJudge Jed. S. Rakoff of the Federal District Court in Manhattan.

A federal judge has raised questions about why he should approve the government’s $285 million civil settlement with Citigroup, suggesting that he is skeptical of the pact.

Judge Jed S. Rakoff of the Federal District Court in Manhattan, who has in the past showed hostility toward Securities and Exchange Commission settlements, issued an order on Thursday laying out what he wants the agency and Citigroup to answer at next month’s hearing on the proposed deal.

He posed nine questions to the parties, including how a fraud of this nature and magnitude could be the result simply of negligence. The judge also asked why the court should approve a settlement in a case in which the S.E.C. alleged a serious fraud but the defendant neither admits nor denies wrongdoing.

He also asked why the amount of the penalty assessed against Citigroup was less than one-fifth of the one assessed against Goldman Sachs in a similar case.

Under the federal securities laws, a judge is required to ascertain whether a proposed S.E.C. settlement is “fair, reasonable, adequate, and in the public interest.” And judges have historically rubber-stamped these settlements.

Representatives for the S.E.C. and Citigroup declined to comment on Judge Rakoff’s order.

The S.E.C. accused Citigroup of misleading its customers in selling them toxic mortgage securities as the housing market neared its collapse. The agency also accused Brian Stoker, a junior Citigroup banker, of fraud. Mr. Stoker is fighting the allegations.

Judge Rakoff’s sharp questions in Wednesday’s order hardly come as a surprise to those who follow his jurisprudence.

“This is classic behavior for Judge Rakoff,” said Andrew Stoltman, a securities lawyer in Chicago. “He has been a thorn in the side for the S.E.C. for years, and I can promise you these questions have made the agency very nervous.”

The judge is perhaps best known for scuttling a proposed $33 million settlement in September 2009 between the S.E.C. and Bank of America over the bank’s acquisition of Merrill Lynch. He called it a sweetheart deal that had been done “at the expense, not only of the shareholders, but also of the truth.” The judge later approved a $150 million deal.

Judge Rakoff has also expressed aversion to the agency’s custom of settling cases without forcing the defendant to admit wrongdoing. In an opinion earlier this year, he threatened to reject the next S.E.C. settlement that included such language.

In Wednesday’s order, Judge Rakoff reiterated his displeasure with the boilerplate wording.

“Given the S.E.C.’s statutory mandate to ensure transparency in the financial marketplace, is there an overriding public interest in determining whether the S.E.C.’s charges are true?” the judge asked.

Judge Rakoff raised several other issues and pointedly asked the agency what it did to protect against repeat violations by the defendants with which it settled.

Despite the S.E.C.’s having charged Mr. Stoker, Judge Rakoff also said he wanted to know why the agency penalized Citigroup and its shareholders rather than the bank executives who committed the wrongdoing. And “if the S.E.C. was for the most part unable to identify such alleged offenders, why was this?”

The case against Citigroup is the third brought by the S.E.C. that accuses a large bank of misleading its clients about mortgage securities. Goldman and JPMorgan Chase Company both settled their cases last year.

Other judges have rejected S.E.C. settlements. A federal judge in Washington would not approve a $75 million agreement between the agency and Citigroup over the value of its subprime mortgages until the parties revised certain aspects of the deal.

Though he is one of 40 federal judges in Manhattan, Judge Rakoff has been ubiquitous of late. On Wednesday, he presided over the arraignment of Rajat K. Gupta, the former Goldman Sachs director accused of insider trading. And he is overseeing the dispute between the trustee in the Bernard L. Madoff fraud and the owners of the New York Mets.

Judge Rakoff’s order in S.E.C. v. Citigroup Global Markets

Article source: http://feeds.nytimes.com/click.phdo?i=3e5d6aac60ec1e9833932da0f8414bad

Filed Under: Business News Tagged With: federal securities laws, housing market, securities and exchange commission

Consumer Confidence Falls as Some Home Prices Rise

October 26, 2011 by NewsMaker Leave a Comment

The Standard Poor’s/Case-Shiller index showed Tuesday that home prices increased in August from July in 10 of the 20 cities tracked. That was the fifth consecutive month that at least half of the cities in the survey showed monthly gains.

The biggest price increases were in Washington, Chicago and Detroit. The greatest declines were in Atlanta and Los Angeles.

The August figures provide a “modest glimmer of hope” that some areas may have bottomed out and could be turning around, said David M. Blitzer, chairman of S. P.’s index committee.

He noted that cities in the Midwest — Chicago, Detroit and Minneapolis — had shown some strength since May.

In Detroit, the recovering auto industry has helped lead a small rebound in the housing market. Home prices have risen 2.7 percent since August 2010, making it and Washington the only two cities to post a year-over-year gain in that time.

Detroit was one of the cities hit hardest after the housing bubble burst more than four years ago. Home prices there are coming off 1995 levels. So the gains are relatively small compared with how far prices had fallen.

In Minneapolis and Chicago, fewer homes are being put on sale, leading to higher prices and better sales figures. That is probably because of fewer foreclosures in those cities. September’s drop in homes for sale in the Twin Cities was the largest in more than seven years, according to the Minneapolis Area Association of Realtors.

Still, Robert J. Shiller, the co-founder of the index and an economics professor at Yale, told CNBC that overall home prices were “flat” and a recovery in the housing market was not on the horizon.

The index, which covers half of all homes in the United States, measures prices compared with those in January 2000 and creates a three-month moving average. The August figures are the latest available.

Prices are certain to fall again once banks resume millions of foreclosures. They have been delayed because of a yearlong government investigation of mortgage lending practices.

A second private group reported on Tuesday that Americans say they feel worse about the economy than they have since the depths of the great recession. Consumer confidence fell in October to the lowest level since March 2009, reflecting the big hit the stock market took this summer and frustration with an recovery that does not feel like one.

The Conference Board, a private research group, said its index of consumer sentiment came in at 39.8, down about six points from September and seven points lower than economists were expecting.

The reading is still well above the 26.9 recorded two and a half years ago. But it is not even within shouting distance of 90, which is what it takes to signal that the economy is on solid footing.

Economists watch consumer confidence closely because consumer spending accounts for about 70 percent of economic activity. The index measures how shoppers feel about business conditions, the job market and the next six months.

Article source: http://feeds.nytimes.com/click.phdo?i=78b60ff394b0c85bb5d73bff741bd9cf

Filed Under: Economy News Tagged With: economics professor, housing market, twin cities