U.S. Consumer Confidence Drops amidst Rise in Home Prices
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The Conference Board announced Tuesday that the consumer confidence index dropped in July to 80.3. The drop comes amidst a rise in home prices on the U.S. market.
It is a slight drop compared to May’s index of 82.1 and still reflects the second-highest level since January of 2008.
The Standard & Poor’s/Case-Shiller 20-city home price index was made public on Tuesday as well. It showed a home price index rise by 2.4 percent between the months of May and April.
Experts believe that the slight drop in consumer confidence will continue to either rise or stay close to May’s index which represents a five-and-a-half-year high. High gasoline prices and interest rates continue to put a lid on any significant increase in consumer confidence.
The 20-city home price index report noted that gains were reflected in each of the 20 cities as compared with figures from the same period last year. Denver and Dallas home prices reached their highest levels since the year 2000.
Ms. Svenja Gudell who is a senior economist at the home price data reporter Zillow explains that this gain in the home price index is based on higher bidding on fewer homes available for sale.
She goes on to explain that there are also fewer foreclosed homes available for sale. Foreclosed homes are typically sold at lower prices by the banks that hold title to them.
Lower mortgage rates coupled with a lower supply of homes will continue to drive prices up. Increasing both of these metrics would slow down the home price index and give some stability to the housing market.
The Conference Board is a New York-based private research group providing knowledge to world organizations such as the consumer confidence index.
Standard & Poor’s, also known as the S&P, provides financial analysis and research on various stocks and bonds and reports stock market indexes to the public.
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