Data that point to slower growth in housing prices and still middling consumer confidence failed to inspire stock investors on Tuesday. Analysts say that without a real change in unemployment, the consumer economy will continue to sag.
The Standard & Poor's/Case-Shiller home price index showed slowing growth in home prices for August, after consistent gains since April of 2009. Annual appreciation rates decreased in all but three of the 20 metropolitan statistical areas. The 10-city composite was up 2.6% and the 20-city composite was up 1.7% from August, 2009, slower growth on both composites than was reported in July. Twelve of the 20 MSAs posted a negative annual growth rate in August, with Detroit and Miami turning negative since July.
The hard-hit Las Vegas area saw improvement from July, with -4.5% growth from last year, as well as Charlotte, N.C., and Cleveland, Ohio, which improved from July with year over year growth rates of -3.4% and -0.4% respectively. San Francisco, Los Angeles and San Diego, all with growth rates above 5% from last year, have all declined since July by 0.3%, 0.4% and 0.6% respectively.
The S&P's Index chairman David Blitzer called it a "disappointing report."
The Federal Housing Finance Agency had slightly better news, with a narrower decline between July and August in its house price index. The agency revised the decline in U.S. house prices to 0.5% from 0.7%, and it reported a 2.4% decline in house prices for the twelve months ending in August. House prices remain 13.6% below April's 2007 peak.
A third component to Tuesday's data releases was the Consumer Confidence Index measured by the Conference Board, a private research group. The index increased to 50.2 from 48.6 in September. The survey polled 5,000 American households before October 19. Economists surveyed by Thomson Reuters expected a reading of 49.2
Confidence on jobs fell in October, according to the index. Survey respondents claiming jobs are “hard to get” rose to 46.1 percent from 45.8 percent, while those stating jobs are “plentiful” fell to the year's low at 3.5 percent from 3.8 percent in September. The percentage anticipating more jobs declined to 14.1 percent from 14.5 percent. The index did reveal that those expecting an improvement in business conditions over the next six months rose to 16 percent from 15 percent.
Michelle Girard, an analyst at RBS, said the confidence index reinforces that economic conditions are basically steady."The good news is that, despite relatively sour moods, consumers are still willing to spend at a moderate pace," she wrote in a note after the Conference Board's report. "The data suggest that consumers see and feel little change in economic conditions
The unemployment level was last reported at 9.6% in September by the Bureau of Labor Statistics.
A season of generally better-than-expected earnings has had mixed results on the street, boosting consumer stocks like
"If earnings boost stocks, that could help confidence, but the most important thing is jobs," said Girard.
