US house prices up despite consumer confidence falling
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 US economy, separate data published yesterday showed consumer confidence fell to its lowest level in five months this month 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 sent prices down more than 30pc, figures suggest 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.
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, a US 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 Eric Lascelles, chief economist at RBC Global Asset Management in Toronto.
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 US economic activity.
Emphasising that pressure, Standard & Poor's said the US faces a one-in-five chance of falling back into recession, although a slow recovery is still the ratings agency's baseline forecast. (Reuters)