US recovery still fragile as house prices fall again

THE US economic recovery is still fragile, according to data published yesterday, which showed house prices fell for the second consecutive month and consumer confidence remained weak.

The Standard & Poor’s (S&P)/Case Shiller index of US 20 cities showed property prices fell 0.3 per cent in August. The dip followed a decline of 0.2 per cent in July. S&P put the fall in house prices down to the withdrawal of the government backed homebuyer tax credit in April.

Property prices in the 20 cities index were 1.7 per cent higher than a year before but this figure also showed house price growth had almost halved in one month – the annual increase in property prices in July had been 3.2 per cent.

David Blitzer, chairman of the index committee at S&P said 17 of the 20 cities in the index saw a fall in property prices compared to July.

“Over the last four months both the 10 and 20 city composites show slowing growth, after sustaining consistent gains since their April 2009 troughs,” he said.

Meanwhile, the Conference Board’s index of US consumer confidence showed a slight increase in sentiment to 50.2 in October from a revised 48.6 in September. But confidence was still at historically low levels.

Lynn Franco, director of the Conference Board’s consumer confidence centre said: “Consumers’ assessment of the current state of the economy is relatively unchanged, primarily because labour market conditions have yet to significantly improve.”