US more confident despite double dip fears
Fears of a double dip in US house prices have not dented consumer confidence in the world's largest economy, new figures show.
The US Consumer Board's latest confidence index recorded a rebound last month, after two successive months of decline, despite a slump in housing market activity and the worst August for the US stock market in a decade. Although confidence remains weak, forecasters had predicted a further decline in the index to 50.5, but it came in at 53.5, up from 51.0 in July.
"The comfort in this release is that confidence did not fall further. But there are few signs that households will ramp up their spending. High unemployment, widespread negative housing equity and low share prices are keeping households on the sidelines," said Paul Dales, US economist at Capital Economics.
Earlier yesterday, the Case-Shiller house price index, which measures the largest 20 metropolitan areas of the US, recorded a 0.3 per cent increase in prices in June, compared to May, also better than forecasts.
The length of time it takes to calculate the index, however, means it is still reflecting the boost to home sales caused by a tax credit for first-time buyers, which expired in June, since when activity has slumped.
Repossessions are continuing to rise and more contemporary housing market snapshots suggest that prices may once again be falling, and the gloomy outlook means that rock-bottom interest rates are failing to tempt buyers into the market. However, mortgage refinancings are at record levels, putting more money in the pockets of existing homeowners.