March 27, 2012

Home Prices, Retail and Consumer Confidence Weak

March 27, 2012

Home Prices, Retail and Consumer Confidence Weak

Case-Shiller Home Price Index (January 2012)

– 20-city, Seasonally Adjusted – Month/Month 0.0 %
– 20-city, Not Seasonally Adjusted – Month/Month -0.8 %
– 20-city, NSA Seasonally Adjusted – Year/Year -3.8 %.

The S&P/Case-Shiller home price index tracks monthly changes in the value of residential real estate in 20 metropolitan regions across the U.S. Home prices are, on the average, where they were in 2003.

The dynamics of the housing market are something like this: prices are close to what is reasonable, there are still many delayed foreclosures which will produce supply, there are an enormous number of homeowners who are underwater and waiting for prices to improve before they put their homes on the market. If and when prices increase those underwater homeowners will try to sell and increase supply and restrain prices. The question is this: to what extent will people who have soured on the value of homeownership choose to become renters and, of so, then for how long?

In keeping with its “everything is OK, nothing to see here” reporting, Bloomberg features an article titled, “Bidding Wars Erupt as U.S. Supply of Homes for Sale Falls.”

Only 3 of the 20 Metro Areas have seen prices increase in the past 12 months: Detroit, Denver and Phoenix.

Chart below.

This of course is the broad view. Julian will post a local home price discussion shortly.

Consumer Confidence (March 2012)

Consumer Confidence – a survey measure of predisposition to spend – fell to 70.2 for March 2012. Previous was 70.8. Consensus was 70.9.

Retail (week ended 3/24/2012)

ICSC-Goldman Store Sales Week/Week -0.5%, Year/Year +2.7%

Redbook Store Sales Year/Year +3.8 %.

Keep in mind that these two surveys have “survivor bias.” They eliminate closed stores.