U.S. home prices probably slumped in March by the most in 16 months, indicating residential real estate will keep weighing on the expansion, economists said before a report today.
Property values in 20 cities dropped 3.4 percent from March 2010, the biggest year-over-year decline since November 2009, according to the median forecast of 25 economists surveyed by Bloomberg News ahead of a report from S&P/Case-Shiller. Other reports may show manufacturing slowed in May and consumer confidence rose as fuel costs eased.
“Weak demand and a deluge of discounted sales of distressed properties have weighed significantly on prices,” said Aaron Smith, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. “It’s hard to be enthusiastic about the economy’s prospects as long as house prices are falling.”
A backlog of foreclosures poised to reach the market means prices may stay depressed, dissuading builders from taking on new-home construction projects. The figures come as recent reports on manufacturing and consumer spending show the economy is slowing.
The Case-Shiller report is due at 9 a.m. New York time. Estimates for the year-over-year change in March home prices ranged from declines of 4.9 percent to 2.8 percent. Economists surveyed projected the gauge of residential real-estate values decreased 0.2 percent in March from the prior month, the same as in February, after adjusting for seasonal variations.