Economists' Outlook

Housing stats and analysis from NAR's research experts.

Daily Economic Update: Case-Shiller and Consumer Confidence

Each day the Research staff takes a look at recently released economic indicators, addressing what these indicators mean for REALTORS® and their clients. Today’s update highlights the Case-Shiller price index and consumer confidence.

  • On a positive note this morning, three consecutive month-to-month price increases led to a reduction in the year-over-year gap in the Case-Shiller price index shrank from 4.6% in May to 4.5% in June.
  • Thirteen of the twenty metro areas tracked by Case-Shiller showed an increase relative to the same time period last year.  Distressed sales are likely dragging on prices in those metros still lagging in year-over-year price growth, but the trend appears positive for a majority of markets.  This month’s Case-Shiller index incorporated data for the 3 months of April, May, and June, so this month’s reading does not yet reflect the more recent price trend that showed up in NAR’s release of July price data earlier this month.  Prices were particularly strong in June and July a year ago, so this may weigh on the year-over-year measure from Case-Shiller next month before easing in the early fall.
  • On a much more troubling note, last month’s debt ceiling debate combined with the sharp stock market declines have left consumer confidence in shaples.  The headline measure tumbled 14.7 points to 44.5 in August, its lowest point since April of 2009.
  • Consumers’ outlook on the current situation dipped, but it was consumers’ outlook for the future which took the biggest hit, falling 23 points to 51.9.
  • The shift in prices depicted by the year-over-year trend in home prices is good and suggests that the price bottom may be near or have been reached. While prices are still down from a year ago, perception and confidence on the part of consumers has held back both home sales and spending in general.  This price stability might provide would-be buyers the confidence to jump in the market.  However, given the combined impact of the budget debate, the stock market’s response to it and slowed economic growth in the 1st half of 2011, and stagnant job growth, the positive signs from prices may be all-for-naught.  While the economy slowed in the 1st half of 2011, there was not an official recession, but this jolt to consumer confidence may drag spending and the economy into negative territory.  Consumers need a reason to be optimistic.

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