(Reuters) – The housing market is seeing hints of stabilization, with February home prices rising for the first time in 10 months, according to a survey on Tuesday, while a measure of consumer confidence last month fell more than expected.
The S&P/Case-Shiller composite index of 20 metropolitan areas gained 0.2 percent in February from January on a seasonally adjusted basis, matching economists’ forecasts.
It was the first time prices have risen since April 2011. That gain was itself an anomaly in a string of declines stretching back to May 2010.
Still, the report was far from suggesting that problems in the battered sector were over. Average home prices across the country were back to late 2002 levels, the report said, as the non-seasonally adjusted 20-city index fell 0.8 percent to 134.20, the lowest since October 2002.
“Even with today’s data, the broad prospect for home prices is at best flat over the course of the year,” said Tom Porcelli, chief economist at RBC Capital Markets in New York.
“And as much as we have had progress with the supply and demand imbalance, it is still a challenge to gather any momentum here.”
Robert Shiller, co-creator of the home price index, said the housing market is likely to remain weak and may take a generation or more to rebound.
“I worry that we might not see a really major turnaround in our lifetimes,” Shiller said on Reuters Insider, calling the day’s home price data a mixed bag.
Data from the Conference Board showed its index of consumer attitudes edged down to 69.2 from a downwardly revised 69.5 in March.
Expectations for prices in the coming year cooled to 5.8 percent from 6.2 percent. March’s inflation expectation was originally reported as 6.3, the highest level since May 2010.
Wall Street saw little reaction immediately after the data with stocks getting a boost in the late morning from corporate earnings.
Earnings results from a round of large manufacturers on Tuesday topped Wall Street’s expectations, as recovering domestic demand helped offset a weak European economy and slowing growth inChina.
A separate, government report showed new single-family home sales sagged in March to their lowest level in four months, but sales in the prior three months were revised higher.
The Commerce Department said March sales slipped 7.1 percent to a seasonally adjusted 328,000-unit annual rate. February’s sales pace was revised higher to 353,000 units, the fastest pace since November 2009, from the previously reported 313,000 units.
“The conditions in housing are still extremely weak, but there are some very subtle, less negative, signs suggesting stabilization there,” said Sean Incremona, economist at 4Cast Ltd in New York.
Six years after home prices started to crumble, the housing market remains a thorn in the side of the economy. Ongoing foreclosures, tight credit and a dearth of buyers have kept the sector on the ropes.
Economists say a meaningful recovery in housing is still a long way off and will show a regional disparity as some areas improve more quickly than others.
The beleaguered housing market has also been a concern for the Federal Reserve. The central bank begins its two-day meeting on Tuesday, and investors will be keen for any insight on whether the central bank will provide more stimulus for the economy.
The Fed releases its statement on Wednesday. It has held interest rates at near-zero since late 2008 and has purchased more than $2 trillion in long-term securities as part of its efforts to bolster the fragile economic recovery.
The central bank has said it will likely keep rates at ultra-low levels at least through 2014.
ATLANTA, LAS VEGAS PRICES TUMBLE
Prices in the S&P/Case-Shiller 20-city index fell 3.5 percent year over year, moderating from the previous month’s decline of 3.8 percent.
Prices dropped in seven of the cities on a seasonally adjusted basis, while prices in two cities were unchanged. On an unadjusted basis, 16 of the areas slumped further.
By Leah Schnurr