Home Prices Continue to Fall, But Confidence is Up

The prices of homes continues to fall, according to the S&P/Case-Shiller Home Price Indices, with a 19.1 percent drop in the first quarter (compared to Q1 2008).

That's the biggest drop since the index began tracking, says the Washington Post.

"Declines in residential real estate continued at a steady pace into March," says David M. Blitzer, chairman of the Index Committee at Standard & Poor's.

"All 20 metro areas are still showing negative annual rates of change in average home prices with nine of the metro areas having record annual declines."

The Minneapolis region saw a monthly decline of 6.1 percent in March, the largest monthly fall the index has ever seen. Phoenix, Las Vegas and San Francisco continue to have the worst annual declines in the country, at 36, 31.2 and 30.1 percent, respectively.

"On a positive note, nine of MSAs are reporting a relative improvement in year-over-year returns and nine of the 20 metro areas saw an improvement in their monthly returns compared to February. Furthermore, this is the second month since October 2007 where the 10- and 20-City Composites did not post a record annual decline," says Blitzer.

Consumer Confidence Up in May

While the price drops show no sign of ending soon, consumer confidence is actually up, according to the Conference Board. Its Consumer Confidence Index rose to 54.9 in May, up from 40.8 in April.

"After two months of significant improvements, the Consumer Confidence Index is now at its highest level in eight months (Sept. 2008, 61.4). Continued gains in the Present Situation Index indicate that current conditions have moderately improved, and growth in the second quarter is likely to be less negative than in the first," says Lynn Franco, director, The Conference Board Consumer Research Center.

"Looking ahead, consumers are considerably less pessimistic than they were earlier this year, and expectations are that business conditions, the labor market and incomes will improve in the coming months. While confidence is still weak by historical standards, as far as consumers are concerned, the worst is now behind us."

A few of the highlights, according to the release:

• The percentage of consumers expecting more jobs in the months ahead increased to 20.0 percent from 14.2 percent
• The proportion of consumers anticipating an increase in their incomes edged up to 10.2 percent from 8.3 percent.
• Consumers claiming business conditions are "good" increased to 8.7 percent from 7.9 percent.

Builder confidence recently hit its highest level since September 2008, according to the NAHB, while the NPD recently reported that consumers are thinking positively about the economy.