STAFF AND WIRE REPORTS


Published: Wednesday, August 27, 2008 at 1:00 a.m.
Last Modified: Wednesday, August 27, 2008 at 12:24 a.m.

A widely watched housing index released Tuesday showed home prices dropping by the sharpest rate ever in the second quarter, even as Americans registered the biggest boost in consumer confidence in two years.



The Standard & Poor's/Case-Shiller U.S. National Home Price Index tumbled a record 15.4 percent during the quarter from the same period a year ago.

The monthly indices also clocked in record declines. The 20-city index fell by 15.9 percent in June compared with a year ago, the largest drop since its inception in 2000. The 10-city index dropped by 17 percent, its biggest decline in its 21-year history.

No city in the Case-Shiller 20-city index, which includes both Tampa and Miami, saw year-over-year price gains in June, the third straight month that has happened.

However, the rate of single-family home price declines slowed from May to June, a possible silver lining, the index creators said.

"While there is no national turnaround in residential real estate prices, it is possible that we are seeing some regions struggling to come back, which has resulted in some moderation in price declines at the national level" said David M. Blitzer, chairman of the index committee at S&P.

Meanwhile, sales of new homes rose in July, but still fell short of economists' expectations, and home prices continued to sink. Still, the July increase followed a sharp downward revision to June's sales.

The Commerce Department reported that new home sales rose 2.4 percent in July to a seasonally adjusted annual rate of 515,000 units, the most since April.

But sales in June had dropped to a pace of just 503,000 -- down from previous estimates of 530,000 -- to mark the worst performance since September 1991.

Economists projected sales to drop in July, but expected the pace to be around 525,000. Given June's sharp downward revision, the level of home sales in July wound up to be less than analysts were anticipating.

Americans more confident

Meanwhile, Americans felt better about the economy in August, as a barometer of sentiment posted the biggest boost in two years amid falling gas prices.

The Conference Board, a private research group, said Tuesday that its consumer confidence index rose to 56.9, up from a revised 51.9 in July.

That is the largest gain since August 2006, and is ahead of the 53 expected by economists.

It was also the second month in a row that sentiment improved, after a six-month slide since January -- but it remains about half what it was a year ago, and worries about the job market persisted.

"It's still too early to call a bottom" on both confidence and housing, said Gary Thayer, senior economist at Wachovia Securities.

"Consumer confidence readings suggest that the economy remains stuck in neutral, but may be showing signs of improvement by early next year," said Lynn Franco, director of The Conference Board Consumer Research Center. However, "overall readings are still quite low by historical standards, and it is still too early to tell if the worst is behind us."

Economists and investors closely monitor consumer sentiment as consumer spending represents about two-thirds of all economic activity.

The Conference Board's index that measures shoppers' current assessment of the economy declined to 63.2 from 65.8 in July. But the one that gauges their outlook over the next six months jumped to 52.8 from 42.7 in July. The 10-point increase marked the biggest gain since November 2005, when the economic fallout of hurricane Katrina was subsiding.

Prices drop across Florida

By the Case-Shiller measure of home prices, Las Vegas was the weakest market in the nation, with a one-year drop in home prices of 28.6 percent. But Miami was close behind with a 28.3 percent decline.

Tampa, the only other Florida city on the list, has experienced a 20.1 percent drop in prices during the past year. In the Case-Shiller monthly measurement, Tampa was down 1.1 percent while Miami was down 1.7 percent.

Neither Sarasota-Bradenton nor Charlotte County-North Port are monitored on the Case-Shiller index.

Data released this week by the Florida Association of Realtors show both markets experiencing the same level of price drops that Tampa has.

The July median sales price in Sarasota-Bradenton was $230,100, down 17 percent from a year ago, while Charlotte County-North Port's median of $141,800 was down 21 percent from the same time in 2007.

Sarasota-Bradenton's median price was down about 1.9 percent from June, though data from Manatee County was not included in that month's report, while Charlotte County-North Port's median was up a half percentage point.

In the Case-Schiller monthly comparison, other markets were up, with Boston notching a 1.2 percent gain and Denver rising 1.5 percent.

Meanwhile, Charlotte, N.C., and Dallas have recorded three consecutive months of positive returns.

"The markets that were the high-flyers during the recent real estate boom continue to be the ones that are leading the current decline," Standard & Poor's said.


Information from The Associated Press was used in this report.