US housing market 'stabilising'

Aug 27, 2008
US housing market 'stabilising'
Consumer confidence recovering as inflation worries subside, says
report

NEW YORK: United States consumer confidence recovered more than
expected this month as worries over inflation eased, while financial
markets combed through a slew of housing data yesterday for reasons
to hope the worst is over for the moribund sector.

Sales of newly constructed US single- family homes in July were lower
than economists expected, but they rose from a June pace that was the
slowest in nearly 17 years, a government report showed.

Another report said US home prices in metropolitan areas fell a
record annual 15.9 per cent in June.

Still, the monthly rate of decline slowed from May, which suggested
the decimated housing sector may be stabilising, according to the
S&P/Case Shiller report.

The Conference Board said its index measuring consumers' mood jumped
to 56.9 this month from last month's 51.9, reaching the highest level
since May, while a decline in inflation expectations should please
Federal Reserve officials worried about an unwelcome rise in price
pressures this year.

The data by no means suggested the stagnant US economy was vaulting
to recovery, though some analysts said it showed signs of
stabilisation that could herald a slow turn for the better if it is
maintained.

'Confidence is still quite depressed, but it's a glimmer of hope from
the lows we saw in June,' said Ms Dana Saporta, economist at Dresdner
Kleinwort Securities in New York.

'I attribute the increase to the drop in gasoline prices, which
offset a deteriorating labour market.'

Stock prices rose modestly after the consumer confidence data and the
US dollar extended its gains against other currencies.

The improvement in consumer sentiment came during a month when oil
prices retreated further from July's record highs but consumers'
evaluation of their present situation and the job market deteriorated
further.

The index of 'jobs hard-to-get' rose to 32 this month from a revised
30.2 last month, pushing the gauge to its highest since October 2003.

'Consumer confidence readings suggest that the economy remains stuck
in neutral, but may be showing signs of improvement by early next
year,' Ms Lynn Franco, director of the Conference Board Consumer
Research Centre, was quoted as saying in the report.

The Conference Board, an industry group, said its gauge of inflation
expectations fell to 6.7 per cent - its lowest since 6.1 per cent in
March - from July's revised 7.5 per cent.

It hit a record high of 7.7 per cent in May and June and was
originally reported at 7.6 per cent for last month.