Home Prices in 20 U.S. Cities Probably Dropped at Slower Rate

December 27, 2011, 2:47 AM EST By Timothy R. Homan

Dec. 27 (Bloomberg) -- Home prices in 20 U.S. cities probably fell at a slower pace and consumer confidence climbed, signs of resilience in the economy heading into 2012, economists said before reports today.

The S&P/Case-Shiller index of property values dropped 3.2 percent in October from the same month in 2010, the smallest year-over-year decrease since January, according to the median forecast of 20 economists surveyed by Bloomberg News. The Conference Board’s confidence gauge rose to a five-month high of 58.6 in December from 56 the previous month, separate figures may show.

Rising builder confidence, a decline in the number of unsold properties on the market and a pickup in construction suggest stabilization in the housing market early next year. Still, the unemployment rate at 8.6 percent and the prospect of another wave of foreclosures represent obstacles for residential real estate and consumer sentiment.

“The housing market is evidently making a turn for the better,” said Richard DeKaser, deputy chief economist at the Parthenon Group Inc. in Boston. “November saw some pretty strong momentum heading into yearend, with consumers looking up.”

The S&P/Case-Shiller index, based on a three-month average, is due at 9 a.m. New York time. Survey estimates ranged from declines of 2.4 percent to 3.5 percent.

The New York-based Conference Board’s consumer confidence measure is due at 10 a.m. The Bloomberg survey median was based on 61 estimates that ranged from 52 to 63.

Confidence Measures

Increased optimism has been evident in other data. The Bloomberg Consumer Comfort Index improved to minus 45 in the period ended Dec. 18 from a reading of minus 49.9 the prior week, marking the biggest seven-day gain since January. The Thomson Reuters/University of Michigan index of consumer sentiment rose to a six-month high in December.

Better job prospects and lower gasoline prices may be helping brighten consumers’ moods.

Employers boosted payrolls by 120,000 workers in November and the jobless rate unexpectedly fell to 8.6 percent, according to Labor Department figures earlier this month. The price of regular unleaded gasoline at the pump fell to $3.22 on Dec. 22, from $3.43 at the beginning of November, according to AAA, the biggest U.S. auto group.

Faster job growth may be needed to spur enough home sales to reduce inventory and push up property values. The Case- Shiller report will show home prices, after adjusting for seasonal variations, fell 0.3 percent in October from the prior month, according to the survey median.

Year-Over-Year

The year-over-year gauges provide better indications of trends in prices, the group has said. The panel includes Karl Case and Robert Shiller, the economists who created the index.

Those gains have buoyed builders’ stocks since the end of the third quarter. The Standard & Poor’s Supercomposite Homebuilding Index, which includes Toll Brothers Inc. and Lennar Corp., has climbed 32 percent, while the broader S&P 500 has increased 12 percent.

Some homebuilders say an increase in sentiment is needed to help boost sales.

“We need a higher level of confidence to get back to the traditional move-upstream or first-time buyer out of the rental,” Jeffrey Mezger, chief executive officer of KB Home, said on a Dec. 21 conference call with analysts. “A lot of consumers are surprised, frankly, at how low home payments are compared to rent.”

Policy makers are promoting programs designed to reinvigorate the housing market. The Obama administration this month started a new version of the federal Home Affordable Refinance Program, or HARP, after the original plan helped less than a quarter of the people targeted to lock in lower mortgage rates.

Officials at the Federal Reserve this month reiterated that they will keep the benchmark interest rate near zero until at least mid-2013. The central bank in September decided to reinvest maturing housing debt into new mortgage-backed securities instead of Treasuries.

--With assistance from Chris Middleton in Washington. Editors: Vince Golle, Kevin Costelloe

To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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Payrolls Dropped in 27 U.S. States in May, Led by California

June 17, 2011, 10:48 AM EDT By Shobhana Chandra

June 17 (Bloomberg) -- Payrolls dropped in 27 U.S. states in May, indicating the weakening in the job market was broad- based.

California led the nation with a 29,200 decrease followed by New York with 24,700 fewer jobs, figures from the Labor Department showed today in Washington. The jobless rate fell in 24 states and rose in 13.

The report is consistent with nationwide figures released June 3 that showed employers added 54,000 workers in May, the fewest in eight months, and unemployment rose to 9.1 percent, the highest this year. Improvement in hiring across a wider swathe of the U.S. is needed to sustain consumer spending, which accounts for about 70 percent of the U.S. economy.

“Hiring is occurring but the job market is definitely not strong,” Jennifer Lee, a senior economist at BMO Capital Markets in Toronto, said before the report. “Corporations are not going to hire in droves until they are certain that the economic recovery is on terra firma.”

Payrolls fell by 14,200 in Pennsylvania, by 13,400 in Michigan and by 13,300 in Maryland, rounding out the top five states with the biggest declines in employment.

Florida, with an increase of 28,000, and Ohio, with a 12,000 advance, showed the biggest gains in hiring. In all, employment climbed in 22 states.

New Mexico showed the largest over-the-month drop in unemployment, as its jobless rate fell to 6.9 percent from 7.6 percent in April.

Highest, Lowest

Unemployment in Nevada remained the highest in the nation even as it fell to 12.1 percent in May from 12.5 percent the prior month. North Dakota’s jobless rate fell from 3.3 percent to 3.2 percent last month, the lowest in the U.S.

While the world’s largest economy has added jobs for eight consecutive months, the lack of a pickup in hiring makes it more likely that the Federal Reserve will keep its benchmark interest rate near zero into next year. The labor market also poses a challenge to President Barack Obama, whose re-election prospects hinge on pushing the jobless rate lower.

“Economic activity generally continued to expand since the last report, though a few districts indicated some deceleration,” the Fed said June 8 in its Beige Book survey of the economy. The job market improved “gradually across most of the nation.”

New Jersey’s unemployment rate climbed by 0.1 percentage point to 9.4 percent in May as the state lost 400 jobs, according to government data. The state’s jobless rate stayed at 9.3 percent in March and April as more people entered the workforce.

Budget Cuts

Further cutbacks in employment are expected as state and local governments try to cope with budget restraints. New Jersey’s 13-member Senate Budget Committee yesterday approved a plan to require government workers to pay more for health care and pensions.

State and local employment data are derived independently from the national statistics, which are typically released on the first Friday of every month. The state figures are subject to larger sampling errors because they come from smaller surveys, making the national figures more reliable, according to the government’s Bureau of Labor Statistics.

--Editors: Carlos Torres, Vince Golle

To contact the reporters on this story: Shobhana Chandra in Washington schandra1@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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