Index of home prices falls 0.1%

November’s decline ended 9 months of gains in 2013

A shopper looks at a General Electric refrigerator at a Lowe’s store in Cranberry Township, Pa., on Jan. 16. Orders for durable goods such as refrigerators fell 4.3 percent in December, the Commerce Department reported Tuesday.
A shopper looks at a General Electric refrigerator at a Lowe’s store in Cranberry Township, Pa., on Jan. 16. Orders for durable goods such as refrigerators fell 4.3 percent in December, the Commerce Department reported Tuesday.

WASHINGTON - U.S. home prices fell slightly in November as wintry weather slowed buying, ending nine straight months of price gains.

The Standard & Poor’s/Case-Shiller 20-city home price index slipped 0.1 percent from October to November, partly reversing the previous monthly increase of 0.2 percent. But the index is not adjusted for seasonal variations, so the decline partly reflects slower buying in the late fall as temperatures drop.

“November was a good month for home prices,” said David Blitzer, chairman of the S&P Dow Jones index committee. “Prices typically weaken as we move closer to the winter.”

Despite the overall decline, home values have continued to rise in many Sun Belt cities. Las Vegas, Los Angeles and Phoenix have registered 20 straight months of rising prices.

But home prices surged for much of 2013, driven by big gains earlier in the year. Prices have risen 13.7 percent over the past 12 months.

Dallas enjoyed its strongest annual gain since 2000. And Chicago home prices climbed at their strongest annual clip since December 1988. Among the cities in the index, only Detroit prices remain below the 2000 level.

The Case-Shiller index covers roughly half of U.S. homes. The index measures prices compared with those in January 2000 and creates a three-month moving average. The November figures are the latest available.

In a separate report, the Commerce Department reported Tuesday that orders for durable goods fell 4.3 percent in December compared with November, when orders had risen 2.6 percent. The weakness was led by a 17.5 percent drop in the volatile category of commercial aircraft.

There was widespread weakness in a number of categories, including a 1.3 percent decline in demand for nondefense capital goods excluding aircraft. This category is viewed as a proxy for business investment plans.

Some of the December weakness probably reflected a temporary dip after November’s big jump, which had been driven by businesses rushing to take advantage of expiring tax breaks.

The December decline came as a surprise to economists. The consensus view among economists was that orders would post a moderate rise reflecting what they believe is an improving outlook for U.S. manufacturers.

Jennifer Lee, senior economist at BMO Capital Markets, said that a good portion of the decline in commercial aircraft orders resulted from the government’s seasonal adjustment process, which trimmed a tripling in demand for airplanes that Boeing reported for the month.

She said demand should rebound in coming months, though it appeared that businesses were proceeding with caution at the moment.

Confidence among U.S. consumers climbed to a five month high in January as optimism about the economy and labor market improved.

The Conference Board’s index advanced to 80.7 from a revised 77.5 in December that was weaker than initially estimated, the New York-based private research group reported Tuesday.

More Americans than at any time since August 2008 said jobs were plentiful, and the share of those viewing business conditions as good was the highest in more than six years. Bigger employment gains that lead to more wage growth would help provide a further push for sentiment and drive the consumer purchases that account for almost 70 percent of the economy.

“One would expect an acceleration in spending momentum going into 2014,” said Millan Mulraine, deputy head of U.S. research and strategy at TD Securities USA LLC in New York, who projected a confidence reading of 80.2. “You’d probably want to see these numbers being sustained over the next few months for you to believe that it will be reflected in spending habits.”

The median projection in a Bloomberg survey of 79 economists called for 78 in the consumer confidence index, little changed from an initial December reading of 78.1. The index averaged 53.7 during the recession that ended in June 2009.

Information for this article was contributed by Josh Boak and Martin Crutsinger of The Associated Press and Katherine Peralta and Kristy Scheuble of Bloomberg News.

Business, Pages 25 on 01/29/2014

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