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Consumer Confidence Sinks to 50.4, a 5-Month Low; Home Prices Rise; Case-Shiller a Very Lagging Price Indicator

By Mike Shedlock on 07/27/2010 – 10:30 am PDTLeave a Comment

Consumer confidence has plunged to 50.4. To put the number in perspective, it was averaging 98 in the last expansion.

Bloomberg reports U.S. Economy: Consumer Confidence Slips to Five-Month Low

The Conference Board’s sentiment index fell to 50.4, below the median forecast of economists surveyed by Bloomberg News and the lowest level in five months, figures from the New York-based private research group showed today. Another report showed home prices rose more than forecast in May as a government tax credit temporarily underpinned sales.

“Faith in the economic recovery is failing,” said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia, who had forecast the confidence index would drop to 50.3. “It’ll be 2013 before we see any semblance of normality in the labor market. It means weaker purchases.”

Home prices in 20 cities climbed 4.6 percent in May from the same month last year, exceeding the median forecast of economists surveyed and the biggest 12-month gain since August 2006, a report from S&P/Case-Shiller also showed. Home sales plunged following the April 30 contract-signing expiration of a government incentive worth up to $8,000, raising the risk that property values will slacken in coming months.

“There may still be some residual impact from the homebuyers’ tax credit,” David Blitzer, chairman of the index committee at S&P, said in a statement. “It still looks possible that the housing market might bounce along the bottom for the foreseeable future, before showing any real improvement that will filter through to the rest of the economy.”

Case-Shiller a Very Lagging Price Indicator

It would help if analysts understood (and properly explained) what is happening and how Case-Shiller works.

Calculated Risk explains in Survey shows house prices falling in June, but long wait for house price indexes

Campbell Surveys put out a press release this morning: Home Prices Tumble in Most Categories During June (no link)

Related Articles:

  1. S&P/Case-Shiller: May 2010
  2. More Pain, Less Gain: S&P/Case-Shiller Preview for May 2010
  3. S&P/Case-Shiller: March 2010
  4. US Consumer Confidence On the Rise After Falling in February
  5. US House Prices on the Rise

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