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U.S. home prices unchanged, confidence depressed

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Home prices were unchanged on average in July in a sign that the weak housing market could be stabilizing, a survey showed on Tuesday.

The S&P/Case Shiller composite index of single-family homes in 20 metropolitan areas was unchanged from a month earlier when adjusted for seasonal factors. Economists expected the seasonally-adjusted series to rise 0.1 percent.

Prices declined 4.1 percent from July 2010.

A weak jobs markets and a heavy load of household debt are helping keep Americans from buying homes despite historically low mortgage rates.

Economists expect the sector will remain weak for years to come but the long slide in house prices since 2008 could be in sight. The Case Shiller 20 cities index is down about 31 percent from its peak in 2006.

"You are quite close to some equilibrium between supply and demand," said Cary Leahey, an economist at Decision Economics in New York.

The data was broadly in line with analysts' expectations and does little to allay fears the United States could slip back into recession.

On an unadjusted basis, prices in the 20 cities rose 0.9 percent month on month, topping expectations for a 0.7 percent rise.

A government report on Monday showed new home sales slipped 2.3 percent in August to a six-month low, while prices also fell during the month.

The U.S. Federal Reserve last week unveiled new measures to ease credit further for home buyers, but analysts caution that the level of mortgage rates is not the main hurdle to buying.

Many economists are skeptical attempts to lower rates will help much because millions of Americas owe more on their mortgages than their homes are worth, which can effectively chain them to their properties while also preventing them from refinancing to lower their monthly costs.

Indeed, some analysts say the steadying of prices might just be the result of a slowdown in the pace of foreclosures.

"This might just be a temporary stabilization." said Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts.

CONFIDENCE SLIPPING

Americans worried about their incomes as they struggled to find work in September, holding consumer confidence at depressed levels and pointing to weak spending in the months ahead.
   
The Conference Board said on Tuesday its index of consumer attitudes was little changed at 45.4 this month from 45.2 in August, and below economists' expectations for a rise to 46.0.
   
Other reports on regional manufacturing and services also pointed to weak economic conditions remaining firmly in place this month.
   
The steep stock market sell-off, political bickering in Washington over budget policy and a worsening sovereign debt crisis in Europe have eroded confidence, viewed as a key gauge of consumer health.
    
These events are threatening to push the U.S. economy back into recession, although most economists say an outright contraction in output will be avoided.
   
"Consumers expressed greater concern about their expected earnings, a sign that does not bode well for spending," said Lynn Franco, director of the Conference Board Consumer Research Center.
    
In a sign that people were struggling to find employment, the jobs-hard-to-get index rose to 50.0, the highest level since May 1983, from 48.5 the previous month.
    
"The problem is that sentiment is not improving and people seem to have no reason to believe that it will improve. That seems to be taking a toll on consumer spending which is moving sideways, not growing," said Pierre Ellis, a senior economist at Decision Economics in New York.
 

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