Consumer outlook up, housing bottom may be near

By ANNE D'INNOCENZIO

NEW YORK -Americans felt better about the economy in August, as a barometer of sentiment posted the biggest boost in two years amid falling gas prices. Two reports suggested that a bottom could be nearing for the housing market, but economists caution it's too early to proclaim that the worst is over.
The Conference Board, a private research group, said Tuesday that its consumer confidence index rose to 56.9, up from a revised 51.9 in July. That's the largest gain since August 2006, and is ahead of the 53 expected by economists surveyed by Thomson/IFR.
It's also the second month in a row that sentiment improved, after a six-month slide since January — but it remains about half what it was a year ago, and worries about the job market persisted.
"It's still too early to call a bottom" on both confidence and housing, said Gary Thayer, senior economist at Wachovia Securities.
The Standard & Poor's/Case-Shiller U.S. National Home Price Index released Tuesday showed home prices dropped a record 15.4 percent during the second quarter. However, the rate of single-family home price declines slowed from May to June, a possible silver lining.
Sales of new homes rose in July, but still fell short of economists' expectations, and home prices continued to sink. Still, the July increase followed a sharp downward revision to June's sales.
"Consumer confidence readings suggest that the economy remains stuck in neutral, but may be showing signs of improvement by early next year," Lynn Franco, director of The Conference Board Consumer Research Center, said in a statement. However, "overall readings are still quite low by historical standards, and it is still too early to tell if the worst is behind us."
Economists and investors closely monitor consumer sentiment as consumer spending represents about two-thirds of all economic activity.
Falling gas prices in recent weeks helped boost consumers' mood, Franco said. Gas prices have dropped 15 cents a gallon in the last two weeks, according to the Lundberg Survey of 7,000 gas stations nationwide, released Sunday. The average price of a gallon of regular gasoline at self-serve stations was $3.70 on Friday.
Despite that, gas nationally was almost 95 cents a gallon higher than a year ago, and the volatility in oil prices are a big concern for investors. But Tuesday's reports helped offset a spike in oil prices that rose out of concerns Hurricane Gustav might hit installations in the Gulf of Mexico in coming days. In early afternoon trading, the Dow Jones industrial average rose 5.86, or 0.05 percent, to 11,392.11.
The Conference Board's index that measures shoppers' current assessment of the economy declined to 63.2 from 65.8 in July. But the one that gauges their outlook over the next six months jumped to 52.8 from 42.7 in July. The 10-point increase marked the biggest gain since November 2005, when the economic fallout of hurricane Katrina was subsiding.
Franco said that declines in the Present Situation Index, both in term of business conditions and the labor market, appear to be moderating.
While economists say they can't underestimate the relief among consumers to see gas prices come down, Americans are still faced with a number of challenges as they head into the crucial fall and holiday selling seasons, from a weak job market to tight credit conditions and the housing slump.
"It's encouraging to see the benefit of lower gas prices helping consumers a bit," Thayer said. But he noted that there's still a lot of worry out there. As for the housing market, he cautioned that mortgage rates have not come down and tighter lending standards could stall any housing recovery.
The Standard & Poor's/Case-Shiller report showed that 14 cities in the monthly index showed improvement from May to June, but nine recorded positive returns. Meanwhile, the Commerce Department reported that new home sales rose 2.4 percent in July to a seasonally adjusted annual rate of 515,000 units, the most since April. But sales in June had dropped to a pace of just 503,000 — down from previous estimates of 530,000 — to mark the worst performance since September 1991.
Economists projected sales to drop in July, but expected the pace to be around 525,000. Given June's sharp downward revision, the level of home sales in July wound up to be less than analysts were anticipating.
The Consumer Confidence report — derived from responses received through Aug. 19 of a representative sample of 5,000 U.S. households — showed people's current assessment of the labor market turned bleaker.
Those saying jobs are "hard to get" rose to 32.0 percent from 30.2 percent in July, while those who found them "plentiful" declined to 13.1 percent from 13.6 percent. Their outlook for what's ahead in the labor market was less gloomy. The percent anticipating fewer jobs in the months ahead decreased to 30.6 percent from 37.3 percent, while those expecting more jobs increased to 10.5 percent from 8.0 percent.
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AP Business Writers Jeannine Aversa in Washington and J.W. Elphinstone in New York contributed to this report.
Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
2008-08-26 13:37:48

Presidents' Week in Park City

It is Presidents' Week in Deer Valley; the town is full and the skiing is terrific. After what seems like months of snowfall every day, we had five days of sunshine which brought smiles to everyone. The sunny days definitely make us feel like spring is coming. The Beach at Deer Valley was full of visitors basking in the sun, with perfectly groomed runs to delight the skiers.

The big news in real estate is the drop in interest rates by the federal government and even more importantly, the Fed is looking at increasing the conforming loan amount, possibly up to over $700,000. If this does occur, it could have a tremendous effect on real estate as many of the lower Deer Valley condos are and most condos near the Park City resort would now qualify for conforming loans rather than jumbo loans. This could mean up to a one percent decrease in interest rate that borrowers would be paying for condos here which would have two effects: it would allow buyers to qualify for a higher priced and nicer condo as well as reducing their monthly payments Stay tuned for further posts on this as I will keep you updated as more information comes out. For now, come out and visit us, as this is the best ski year that I can remember since the 80’s.