Home prices in 20 US cities probably declined at a slower pace and consumer confidence improved, signs the economy gained strength heading into next year, economists said before reports this week.
Property values dropped 3.2 percent in October from the same month last year, the smallest year-over-year decrease since January, according to the median forecast of 20 economists before a report from tomorrow from Standard & Poor’s/Case-Shiller. Consumer confidence rose to a five-month high this month and more people signed contracts to buy previously owned homes than a month earlier, other data could show.
Rising builder confidence, fewer unsold new properties on the market and a pickup in construction point to improvement in the industry that triggered the last recession.
Real estate is still facing another wave of foreclosures that may keep pressure on home prices, making for an uneven housing recovery.
“We’ll continue to see prices drop,” said Mark Vitner, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina.
“The middle of 2012 is when we think prices will actually bottom,” he said.
Economists surveyed projected the gauge of residential real-estate values declined 0.3 percent in October from the prior month, when it fell 0.6 percent. The index was down 31 percent in September from its July 2006 peak.
Figures expected on Thursday show pending sales of previously owned homes rose 1.5 percent last month after a 10 percent jump, economists said before a report from the National Association of Realtors.
Reports last week showed a pickup in demand for houses. Sales of previously owned homes, which make up about 94 percent of the market, rose 4 percent to a 4.42 million annual pace, the most since January, the National Association of Realtors said on Wednesday.
Purchases of new single-family properties advanced 1.6 percent to a 315,000 annual pace, a seven-month high, figures from the US Department of Commerce showed on Friday. The increase pushed the number of new homes on the market to a record low.
As housing stabilizes and employment strengthens, consumers are becoming more optimistic. Confidence rose to 58.6 from 56 last month, according to the Bloomberg survey median before a report tomorrow from the New York-based Conference Board.
Other surveys reflect gains in optimism. The Bloomberg Consumer Comfort Index improved to minus 45 in the period ended Dec. 18 from a reading of minus 49.9 the prior week, marking the biggest seven-day gain since January.
The Thomson Reuters/University of Michigan index of consumer sentiment rose to a six-month high this month.