Home prices fell in the month of February, but rose compared to a year ago for the first time in more than three years, in the latest sign that the housing market is slowly recovering.
In other data, U.S. consumer confidence rose in April to the highest level since the collapse of investment bank Lehman Brothers in September 2008, driven by growing optimism about the labor market, according to a private sector report released Tuesday.
U.S. house prices have benefited recently from a federal homebuyer tax credit that expires on April 30, but a glut of mortgage foreclosure sales continue to weigh on the market, Standard & Poor's said on Tuesday.
The S&P/Case-Shiller 20-city composite price index fell 0.9 percent on an unadjusted basis in February, worse than a 0.3 percent decline estimated in a Reuters survey. Seasonally adjusted, prices declined by 0.1 percent, as expected, after a string of eight straight monthly increases.
S&P's 10-city and 20-city index increased year-on-year for the first time since December 2006, rising 1.4 percent and 0.6 percent, respectively, compared to February 2009.
But the 20-city index gain was half of the rise forecast in a Reuters poll.
"We are really still in what we consider a stabilization period," said Tim Ghriskey, chief investment officer at Solaris Asset Management in Bedford Hills, N.Y.
From the peak in mid-2006 through February 2007, U.S. home prices are still down more than 30 percent on average nationwide, S&P noted.
While prices slid in February, mortgage rates stayed low near 5.0 percent and the number of home sales leaped in March as buyers rushed to take advantage of the soon expiring tax credit of up to $8,000. Sales and prices through the spring months will be closely monitored to see if the momentum continues once the tax incentive ends.
"While the year-over-year data continued to improve for 18 of the 20 Metropolitan Statistical Areas and the two Composites, this simply confirms that the pace of decline is less severe than a year ago," said David M. Blitzer, Chairman of S&P's Index Committee, in a statement. "It is too early to say that the housing market is recovering."
Separately, U.S. consumer confidence rose in April to the highest level since September 2008, according to the Conference Board, a private research group based in New York.
The Board's index of consumer attitudes rose for the second straight month in April to 57.9, up from a downwardly revised 52.3 in March. The April reading is the highest since September 2008's 61.4, before going into freefall. The median of forecasts from analysts polled by Reuters was for a reading of 53.5 for April.
The index — which measures how shoppers feel about business conditions, the job market and the next six months — had been recovering fitfully since hitting an all-time low of 25.3 in February 2009.
Economists watch the number closely because consumer spending including healthcare and other major items, accounts for about 70 percent of U.S. economic activity.
April's reading is still far from what's considered healthy. A reading above 90 indicates the economy is on solid footing; above 100 signals strong growth. Still, the monthly survey of consumers showed that consumers' current and short-term concerns about jobs and the overall economy are easing.
One component of the overall index, which assesses how consumers feel now about the economy, rose to 28.6 in April from 25.2 in March. The other component, which measures shoppers' outlook over the next six months, climbed to 77.4 from 70.4.
Consumers' labor market assessment improved. The "jobs hard to get" index fell to 45.0 percent from 46.3 percent, while the "jobs plentiful" index increased to 4.8 percent from 4.0 percent.
"This was a solid overall report," said Tom Porcelli, U.S. market economist at RBC Capital Markets in New York.
"There was strength in both the present situation and the expectations component. The labor differential also improved. We find that to be a pretty useful indicator for what's happening with an employment perspective. We are definitely moving in the right direction," he said.
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