Home prices show sign of stabilizing

Average home prices fell from a year ago and were still at levels seen in the summer of 2003. ASSOCIATED PRESS Enlarge

NEW YORK -- The drastic plunge in U.S. home prices continued to level off in April, hinting at stabilization in the housing market, but job market worries pushed consumer confidence to a seven-month low in June.

The S&P/Case-Shiller composite index of single-family home prices in 20 metropolitan areas dipped 0.1 percent month over month on a seasonally adjusted basis.

The decline was the smallest since last July. Average home prices fell from a year ago and were still at levels seen in the summer of 2003.

On a nonseasonally adjusted basis, however, the index rose 0.7 percent, its first advance in eight months, the report said.

Meanwhile, the Conference Board, a private research group, reported Tuesday that its Consumer Confidence Index slipped to 58.5 in June from a revised 61.7 in May.

Economists had expected the figure to edge up to 61. The results follow an almost 6-point drop from May to April, which had marked a six-month low.

A reading of 90 indicates a healthy economy on the index, which measures how Americans feel about business conditions, the job market, and the next six months.

Economists carefully monitor consumer confidence because consumer spending accounts for 70 percent of U.S. economic activity.

Although house prices were helped by the start of the spring selling season, data showed Tuesday, economists cautioned that prices are likely to crawl along at low levels because of the unusually large number of homes up for sale and ongoing foreclosures.

The sour view of consumer confidence came after the economy added just 54,000 jobs last month. Data earlier in the week showed consumer spending was flat in May from April.

Lynn Franco, director of the Conference Board Consumer Research Center, said rising gas prices have much more of an impact on confidence as they go up than when they fall.

The Conference Board report echoed the preliminary Thomson Reuters/University of Michigan survey earlier in the month.

"Consumers are growing increasingly worried about the near-term economic outlook," says Mark Vitner, senior economist at Wells Fargo.

Economists said political wrangling in Washington as lawmakers try to come up with a budget deal to extend the debt ceiling likely also hurt sentiment.

"Add turmoil abroad, a debt-ceiling commission still in gridlock, and a Federal Reserve that appears to have emptied out their bag of tricks, and it's no wonder the consumer has lost confidence in the recovery," Lindsey Piegza, economist at FTN Financial, wrote in a note.