Daily Economic Update: Case-Shiller Index, Consumer Confidence And New Home Sales

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 Index, Consumer Confidence and New Home Sales.

• A flurry of indicators were released today, but none produced a clear signal for the markets or economy.
• The 20-city Case-Shiller index was flat on a month-to-month basis (seasonally adjusted) after last month’s 0.4% improvement. This month’s statistic reflects sales from March, April and May. Compared to the same period in 2011, sales prices were 4.5% lower, even softer than the 4.2% gap from a month earlier. However, March, April and May of last year were the peak of the tax credit-induced sales surge, so prices then likely reflect this enthusiasm. Prices eased in the summer and fall of 2010, so the year-over-year numbers will look better in the coming months.
• Only Washington, DC reported stronger prices this year than the same time last year at 1.3%. Of the 20 metro areas covered, 9 reported stronger, seasonally adjusted prices relative to a month earlier. In short, price growth is a mixed bag at the local level which is reflected in the relatively flat headline figure.
• Consumer Confidence inched up 1.9 points to 59.6 in July. The outlook on current conditions slipped, while expectations for improvement in the future rose. Consumers were pessimistic on the current job and business front, but saw some improvement on the horizon.
• New homes sales were down 1.0% in June compare to May of this year (seasonally adjusted), but were 1.6% stronger than in June of 2010. The median home price for new homes is up 7.2% relative to June of 2010, likely reflecting a tighter stock and larger homes selling than last year when the $8,000 Federal tax credit was in effect. Steady sales and little construction dragged the months supply down to 6.3 from 6.4 in May, well below the 8.2 months in June of 2010.
• New homes sales continue at a steady pace, which should not change as long as home construction is restrained by large supplies of foreclosed and short-sale properties as well as the low prices for existing properties. Price growth appears to be bottoming out, a pattern that will gain traction later this summer and fall as last year’s strength gives way to this year’s stability. However, consumers need more good news. High gas prices, budget concerns in the news, and stagnant job creation hurt consumer confidence and sales on small and large goods alike. Home sales and prices are steady, but tenuous. Consumers, like businesses, need a clear direction.