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Housing Continue to Show Improvement, yet Confidence Drop Unexpectedly Amid Rising Unemployment!!!

Tue, Jul 28 2009, 15:14 GMT
by ecPulse.com analysis team

ecPulse.com

The housing sector continues to show further signs of improvement as the recession seems to be fading away, as cheap home values continue to lure bargain buyers into buying new homes, meanwhile consumer confidence continue to drop amid rising unemployment, tightened credit conditions, and diminishing wealth.

The S&P/CaseShiller house price index was released for the month of May, the index showed that average prices rose to 139.84 from the prior revised estimate of 139.21, while the S&P/CS 20 Composite index, which measures prices in 20 metropolitan areas in the United States declined by 17.06% compared with a year earlier, and better than median estimates of a 17.90% drop.

The housing sector continues to show further signs of improvement, as after almost three years of misery amid the worst slump in more than seven decades, the housing sector started to show signs of stabilization and recovery over the last few months, and accordingly activity started to increase slightly in the housing market.

However, rising foreclosures and rising unemployment will probably continue to weigh down on activity in the housing market over the course of this year, yet we should continue to witness further signs of gradual recovery in overall activity, especially as conditions seem to have become much better than earlier this year.

Moreover, the U.S. Conference Board released today the consumer confidence index for the month of July, consumer confidence dropped to 46.6 from the prior estimate of 49.3 and well below median estimates of 49.0.

The business situation index declined to 23.4 from 25.0, while the expectations index retreated to 62.0 from 65.5, meanwhile people saying jobs are hard to get rose to 48.1 from 44.8, which indicate that the labor market continues to weigh down on economic activity.

Consumers are still hammered by rising unemployment, as unemployment rose in June to a 26-year high at 9.5% and is still expected to rise further over the course of this year, and accordingly we should expect consumer spending to remain weak, as companies will continue to layoff more workers in order to survive the recession, which means further misery onto consumers.

The U.S. economy is expected to start recovering over the course of the second half of this year, as we already started to see some improvement in the performance of different sectors including the manufacturing, the housing, and the services sectors, however conditions are still somehow shaky and accordingly we should expect the economy to continue stabilizing over the upcoming period, before activity starts to recover during next year probably.

The U.S. economy is still facing some challenges that are posing huge threats to economic growth, as consumer spending is yet to recover fully, while the housing market remains on the edge amid rising foreclosures and tightened credit conditions, however we seem to have passed the worst already, yet the job is not finished which means that more work needs to be done in order to insure the economy is back on the right track to fulfill its long term growth potentials…

Published on  Tue, Jul 28 2009, 15:15 GMT