- The Washington Times - Wednesday, July 1, 2009

Home prices continued to deteriorate in April in many metropolitan regions, but their rate of decline has moderated, indicating that the nation’s devastated housing market may begin to stabilize in the not-too-distant future. Meanwhile, after strong gains in April and May, consumer confidence unexpectedly dipped in June, the victim of a weak labor market.

The markets shed about 1 percent of their value Tuesday. The Dow Jones Industrial Average lost 82.38 points, closing at 8,447.00. The broad-based Standard & Poor’s 500 Index dropped 7.91 points to finish at 919.32. And the tech-heavy Nasdaq Composite Index declined 9.02 points, ending the day at 1,835.04.

The S&P;/Case-Shiller home price index for 20 major metropolitan areas declined by 18.1 percent in April compared with a year ago. That 12-month rate of decline was slower than the 18.7 percent pace for March and February and the record 12-month rate of decline (19 percent) in January.

“The pace of decline in residential real estate slowed in April,” said David M. Blitzer, chairman of the S&P; Index Committee. “While one month’s data cannot determine if a turnaround has begun, it seems that some stabilization may be appearing in some of the regions.”

Home prices in the Washington area increased 0.8 percent in April, the report showed. Prices in seven other regions also rose in April, but the 20-region composite index fell 0.6 percent from March.

The April dip was significantly slower than recent price plunges. Across the 20 metropolitan areas, home prices plummeted an average of 2.4 percent per month during the October-March period.

“House prices are no longer in free fall, as they were late last year. They are still falling at a steady clip, however,” said Patrick Newport, U.S. economist for IHS Global Insight, who noted that the reported monthly rates are three-month moving averages.

Mr. Newport expects prices to fall further because foreclosures are still rising. “Indeed, all evidence indicates that the foreclosure problem is getting worse,” he said. The foreclosure and delinquency rates, as measured by the Mortgage Bankers Association, reached an all-time high in the first quarter, he noted.

Mr. Newport also discounted the importance of April price increases in several regions, attributing them to seasonality. “A year earlier, prices were higher in April than in March in seven cities. Prices in these seven have since declined 12 percent on average,” he said.

The 20-city composite index is now 32.6 percent below its July 2006 peak. Prices have now fallen back to April 2003 levels, the data revealed.

The bursting of the housing bubble and the bear market have combined to shave $12.2 trillion from household net worth since the end of 2007.

Notwithstanding the ongoing housing problems and a deteriorating labor market, consumer confidence still managed to regain some lost ground since February, when the Conference Board’s consumer sentiment index reached a record low 25.3. By May, spurred mostly by a stock market rebound, the index had improved to 54.8. But the consumer confidence index unexpectedly dipped to 49.3 last month.

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