:S
Source: Economist
US consumer woes overshadow housing cheer
- Consumer confidence unexpectedly decreased in the month of September to 53.1 in September from 54.5 in August.
- Economist had been expecting the index to increase to 57 from 54.1 originally reported for the previous month.
- Despite the unexpected decrease the index remains well off the low of the 25.3 set in February 2009.
- Report showed that those claiming current business conditions are “bad” rose to 46.3% in September from 44.6% in August, although those claiming conditions are “good” also edged up to 8.7% from 8.5%.
- Those claiming jobs are “hard to get” increased to 47% in September from 44.3% in August and those claiming jobs are “plentiful” fell to 3.4% from 4.3%
- Consumers’ short term outlook was also slightly more pessimistic, with the expectations index edging down to 73.3% in September from 73.8% in the previous month.
- Consumers expecting business conditions to improve over the next 6 months fell to 21.3% in September from 22.2% in August. While those expecting conditions to worsen decreased to 15% from 15.2%
- Outlook for the labor market was nearly unchanged, with those expecting more jobs in the months ahead edging down to 17.9% in September from 18% in August and those expecting fewer jobs unchanged at 23.1%.
- Those expecting an increase in the incomes increased slightly to 11.2% in September from 10.8% in August.
"While not as pessimistic as earlier this year, consumers remain quite apprehensive about the short-term outlook and their incomes. Plus, with the holiday season approaching, this is not very encouraging news.” – Lynn Franco (Director, Conference Board Consumer Research Center)
Source: RTT, Barron's & Marketwatch
US home prices in July rose for the 3rd Consecutive month
- US home prices in July rose for the 3rd straight month, surpassing forecasts and suggesting that the housing market is stabilizing after a 3 year plunge.
- Home prices in 20 metropolitan areas rose 1.6% in July from June, more than triple the estimate of a 0.5% rise found in Reuters poll.
- Index rose 1.4% the month before.
- 10-city index gained 1.7% in July after a 1.4% rise in the previous month.
"The upshot is that the housing market is starting to clear ever so slightly, that sustains hope that housing will get to a stable place which is good news for consumer balance sheets and, ultimately, for the economy,"" said Pierre Ellis, senior economist at Decision Economics.
- A record stockpile of foreclosed homes have been exerting pressure on home prices overall, but recent home sales reports show an easing up of the massive unsold inventory.
- A first time buyer credit of $8,000, which ends in November 30, has jump-started housing activity this year but there are concerns about the impact when the incentives disappears.
"These figures continue to support an indication of stabilization in national real estate values, but we do need to be cautious in coming months to assess whether the housing market will weather the expiration of the Federal First-Time Buyer's Tax Credit in November, anticipated higher unemployment rates and a possible increase in foreclosures," - David Blitzer, chairman of the index committee at S&P, said in a statement.
- The monthly price increases helped the annual rates, with the yearly pace of declines in home prices slowing to a 12.8% drop in the 10-city index and 13.3% downturn in the 20-city index.
- All 20 metro areas showed an improvement in the annual rate of decline in July compared with June. On a monthly basis, only Seattle and Las Vegas showed declines.
- Prices have plummeted 33.5 percent for the 10-city index and 32.6 percent for the 20-city index from the peak in the second quarter of 2006.
Source: Reuters, Federal Reserve Bank of Cleveland, Barron's
Thoughts on the Market
It has been a while since I last posted anything, since I have been giving my self a fairly descent length vacation until this Wednesday the 23rd. So there’s plenty of articles that I have to catch up on reading. So based on technicals only… The market looks to be heading into one MAJOR resistance, dating back to when this whole crisis around the market’s peak in October 2007. Since the trendline was formed, the market has been responding to it with full conviction. If the market is to remain strong I am expecting the market to pull back to 1043 before it resumes and attempts to break that trendline again. If that 1043 level fails than 1020 is my next target.
Meredith Whitney: Home prices going down further
- Renown analyst, Meredith Whitney predicts home prices will go down more dramatically from here.
- Believes we still have another 25% more on the downside
- Less demand = supply = home prices go down further
- No bank underwrote the loan with 10% unemployment and its still rising.
- Over $7 trillion were underwritten with 6% unemployment assumptions
- No doubt that home prices go down, just a question of when.
- When government incentives get removed home prices will go down more again.
- Banks are not keeping a lot of mortgages on their own books, rather they are selling.
- Doesn’t see the driver for unemployment reversing anytime soon.
- Those who can afford credit are trying to trim down their debt
- Those who can’t afford credit are trying to get more credit in which they don’t have access to.
- Consumer debt has gone down dramatically.
- People spending more on credit card rather than debit card
- 80% of most household economic decisions are made by women
- Most housing regulators see 65% homeownership level.
Source: CNBC
