by David Berman
What more can be said about U.S. housing prices other than "Ugh"? The S&P Case Shiller home price index for February fell 0.2 per cent in February from the previous month. On a year-over-year basis, prices sank 3.3 per cent. As Toronto-Dominion Bank points out, that’s the biggest decline since November 2009. And as The Big Picture notes, a double dip is almost upon us, raising questions about the economic recovery and the Federal Reserve’s likely response.
Yet, stocks were higher in mid-morning trading on Tuesday, suggesting that investors are willing to blow this one off. The gains could be because the Conference Board’s consumer confidence index rose to 65.4 in April, which was a little better than expectations. It suggests that recent job gains are overshadowing rising energy prices.
But as The Economist’s Free Exchange points out, the report on U.S. home prices wasn’t quite as bad as the headlines might suggest. As they remind us, the Case Shiller index is actually a three-month rolling average, which means that the latest reading might not be taking into account some recent improvements. As well:
Perhaps more importantly, the monthly rate of decline continues to slow. In October, prices fell 0.9 per cent according to the seasonally adjusted 20-city index. Since then, the drop has shrunk in each month, down to just a 0.2 per cent fall in February. Meanwhile, both employment and rents are growing.