Home prices in 20 U.S. cities rose in May from a year earlier as a government tax credit temporarily underpinned sales, economists forecast a report to show today.
The S&P/Case-Shiller index of property values increased 3.9 percent from May 2009, according to the median of 26 projections in a Bloomberg News survey. Another report may show consumer confidence dropped in July to a five-month low.
A retreat in demand since the April 30 contract-signing deadline to be eligible for an incentive worth up to $8,000 signals home prices will slacken in coming months. Mounting foreclosures may add to the pressure on property values, pointing to decreases in home equity that will hurt consumer spending and economic growth.
“The federal homebuyers tax credit has been an important stimulus to demand and it’s unclear whether prices will remain stable once that stimulus is gone,” said Zach Pandl, an economist at Nomura Securities International Inc. in New York. “When you look at fundamentals in the housing market they still look pretty poor. You have limited demand and a lot of supply.”
The home-price figures are due at 9 a.m. New York time. Estimates ranged from increases of 2.9 percent to 5.1 percent, after a 3.8 percent gain in the 12 months to April.
From the AP:
Thought the housing crisis was over? Not quite.
Despite four years of falling prices and recent signs that they were finally bottoming out, homes are expected to lose still more value in many metro areas over the next year.
Parts of the country already pummeled by the housing crisis, like Las Vegas, Phoenix and Miami, will be hit hardest. But even some places that have rebounded or held up relatively well — including New York, Los Angeles and Washington, D.C. — will suffer, too.
That’s the conclusion of economists who have been reducing their estimates for home prices as the outlook for the economic recovery has darkened. The number of homes for sale or headed for foreclosure is so high that they think prices will be even lower by next July.
The average home price in the Standard & Poor’s Case-Shiller index of 20 big U.S. cities is forecast to drop nearly 2 percent this year from a year earlier, according to the average estimate of more than 100 economists polled this month by MacroMarkets LLC.
Moody’s predicts that other areas — New York, Los Angeles, San Diego, San Francisco, Denver, Detroit, Cleveland, Minneapolis, Tampa, Fla.; and Washington D.C. — will see declines of 2 to 8 percent by next July.