Declining US house prices approaching recession low
Residential property prices dropped in the 12 months to February by the most in more than a year, putting the market on the verge of eclipsing the nadir reached during the US recession.
The S&P/Case-Shiller index of property values in 20 cities fell 3.3pc from February 2010, the biggest year-over-year decline since November 2009, the group said yesterday.
At 139.27, the gauge was just shy of the six-year low of 139.26 in April 2009, two months before the economic slump ended.
Values will probably keep falling as foreclosures swell the supply of unsold homes, which means the construction industry will take time to recover.
Another report showed US consumer confidence climbed more than forecast this month, making it more likely spending will keep growing as the economic expansion creates jobs and stock prices advance.
"Housing will continue to lag the recovery until foreclosures abate," said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto.
At the same time, "the negative wealth effect from home price declines seems to be more than offset by stock market gains", and "the economy is moving in the right direction", he added.
Stocks rose on optimism over improving corporate earnings.
The Standard & Poor's 500 Index increased 1pc to 1,347.95 in early trading in New York.
The drop in home prices matched the median forecast of 26 economists surveyed by Bloomberg. Estimates ranged from declines of 2.5pc to 4pc.
The Conference Board's consumer confidence index rose to 65.4 from a revised 63.8 reading in March, figures from the New York-based private research group showed.
The median forecast of economists surveyed by Bloomberg projected it would advance to 64.5.
Six straight months of job growth along with joblessness at a two-year low in March are helping sustain consumer purchases, which account for about 70pc of the economy.
At the same time, bigger gains in sentiment may be difficult to achieve as households spend more for food and petrol, which is at the highest level in almost three years. (Bloomberg)