US consumer confidence and house prices weaken

 
City A.M. Reporter
US consumers turned more pessimistic this month, while home prices fell back below crisis-era lows in March, pointing to an economy that continues to struggle.

There are also more signs of softness in manufacturing as a barometer of business activity in the Midwest fell to its lowest reading since November 2009.

Sluggish economic growth seen in the first quarter of the year, when the US grew more slowly than expected, looks to have persisted early in the second quarter.

"The question is, 'Is the softer data we're seeing transitory, or is it likely to persist throughout the remainder of 2011?' Right now, that's an open question that investors are trying to figure out," said Michael Sheldon, chief market strategist at RDM Financial in Westport, Connecticut.

US single-family home prices dropped in March to fall below the low hit in April 2009 during the financial crisis, a closely watched survey showed.

The S&P/Case-Shiller composite index of 20 metropolitan areas declined 0.2 per cent in March from February on a seasonally adjusted basis, in line with economists' expectations.

The 20-city composite index was at 138.16, falling below the 2009 low of 139.26.

The glut of houses for sale, foreclosures, tight credit and weak demand have kept the housing market on the ropes even as other areas of the economy start to recover.

Home prices had been supported last spring by a tax credit, and the housing market has struggled since the credit expired.

Prices in the 20 cities fell 3.6 per cent year over year, topping expectations for a decline of 3.3 per cent.

"The declines sustained in the last 12 months have almost erased the gains of the previous 12 months," said Cary Leahey, economist and managing director at Decision Economics in New York. "The housing market is treading backward but not drowning."

Separately, the Conference Board, an industry group, said its index of consumer attitudes fell to 60.8 in May from a revised 66.0 in April, well below economists' forecasts for 66.5.

Consumers took a more negative view of business and labour market conditions, while inflation expectations jumped up.