US house prices higher in April but consumer confidence falls to five month lows
US home prices picked up in April for the third month in a row, the latest indication a recovery in the housing market is gaining traction.
But in a sign of the struggles still facing the broader economy, separate data on Tuesday showed consumer confidence fell to its lowest level in five months in June as Americans' expectations on the economy soured.
The S&P/Case Shiller composite index of 20 metropolitan areas gained 0.7pc on a seasonally adjusted basis, topping economists' expectations for a 0.4pc gain.
Compared to a year ago, home prices fell 1.9pc in the 20 cities, above expectations for a decline of 2.5pc, and an improvement from the 2.6pc annual decline seen in March.
April's gain made for the longest streak of consecutive monthly gains since prices were boosted by the homebuyer tax credit from mid-2009 into early 2010.
"The housing recovery in this cycle has been painfully slow to develop, but it is unmistakably here," said Chris Low, chief economist at FTN Financial in New York.
"This time, unlike 2010 when the first-time homebuyer tax credit lifted sales, it is happening with only limited help from the government."
Six years after the housing market's far-reaching collapse that sent prices down more than 30pc, recent data suggests the sector has finally hit bottom.
Still, the housing market has a long way to go before full recovery as it faces a large pipeline of foreclosures, tight credit restrictions and weak demand.
"The healing continues and we will eventually find ourselves with a normal looking housing market," said Eric Lascelles, chief economist at RBC Global Asset Management in Toronto.
"It's still very much a multi-year process, but it's heartening to see those home prices start to go up."
Even as the housing market is firming, the broader economy is struggling under the weight of a sluggish labour market and fears over the fallout of Europe's debt crisis.
The Conference Board, an industry group, said its index of consumer attitudes fell to 62.0 from a downwardly revised 64.4 in May, falling short of economists' expectations. It was the lowest level since January.
While consumers' assessment of their current situation improved, they were less upbeat about their expectations for the next six months. Fewer respondents expected business conditions or employment would improve in the coming months.
"It's the future they're more scared about, and I can't say I disagree with that concern given European problems, fiscal cliffs and all the various challenges that will present over the next six months," said Lascelles.
The consumer confidence index is down nearly 10 points from the peak hit in February. Consumer spending -- a major engine of economic growth during the housing boom -- accounts for about 70pc of U.S. economic activity.
"It does reinforce that confidence continues to wane, which does keep pressure on the recovery," said Sean Incremona, economist at 4Cast Ltd in New York.
Emphasizing that pressure, Standard & Poor's said the United States faces 20-percent odds of falling back into recession, although a slow recovery is still the ratings agency's baseline forecast.
S&P cut the U.S. debt rating to AA-plus last year.
Financial markets saw little reaction to the data as investors had their attention on Europe ahead of a summit of leaders later this week.
Although the S&P home price report lags by nearly three months, it is seen as the benchmark for assessing the market.
Co-founder Robert Shiller was less convinced than some that it was a definitive sign prices have stabilized, saying it was encouraging but still too soon to tell.
"I'm not saying that it's going to go down, but I am certainly not going to agree that it can't go down," Shiller told Reuters Insider.