U.S. home prices likely eked out a small gain in June, but a rise would represent the final tail-winds of the homebuyer tax credit that ended in April rather than housing market improvement, economists said.
Sales have failed to sustain traction in the wake of the federal incentive that drew summer sales forward into spring months.
Tepid home buying despite record low mortgage rates, combined with the high hurdle of foreclosure sales, will keep weighing on home prices.
The Standard & Poor’s/Case-Shiller 20-city composite home price index likely rose 0.2 percent in June after a 0.5 percent increase in May, seasonally adjusted, according to a Reuters survey of 18 economists.
Forecasts ranged from a 0.6 percent drop to a 0.5 percent rise.
If prices are flat or higher in June, based on the S&P/Case-Shiller series, it would likely be because the indexes are based on three-month moving averages and may be slower to adjust, several Wall Street firms noted.
The rebound in U.S. home prices probably slowed, while consumer confidence languished near a five-month low, indicating threats to the economic recovery are mounting, economists said before reports toda
Record foreclosures, unemployment near a 26-year high and a plunge in sales following the end of a government tax credit will probably pressure home values in coming months. Further erosion in home equity may undermine Americans’ confidence and limit consumer spending, which accounts for about 70 percent of the economy.
“The housing market is in the midst of a double dip, with sales declining and prices likely to,” said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia. “Consumers are in a state of repairing their balance sheets. It would be fairly problematic for consumer spending if there was another home-price decline.”
The home-price data from S&P/Case-Shiller are due at 9 a.m. New York time. Estimates ranged from increases of 2.5 percent to 4.2 percent. It would be the first time the measure failed to improve since a 19 percent drop in the year ended January 2009, which was the worst performance in records dating to 2001.
From Seeking Alpha:
As I demonstrated in prior posts, given their strong correlation, the home price indices provided daily by Radar Logic, averaged monthly, can effectively be used as a preview of the monthly S&P/Case-Shiller home price indices.
The current Radar Logic 25 MSA Composite data reported on residential real estate transactions (condos, multi and single family homes) that settled as late as June 25 indicates that the final expiration of the government’s tax gimmick drove a second, albiet more tepid, price bounce with prices increasing slightly since May but remaining below the tax credit fueled peak reached last year.
Look for tomorrow’s S&P/Case-Shiller home price report to reflect an increase of prices as the source data moves further through months affected by the tax credit activity.