This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

Home Values Slow, Turning Housing Market 'Dicey'

NEW YORK (TheStreet) — Consumer confidence rose again last month. But slowing home values could put a dent in that confidence, especially if that slowdown becomes a decline in the final months of 2014.

The Conference Board's confidence index was up to 92.4 in August, up from 90.9 in July. Americans aren't necessarily taking the long view on the economy, but, with the exception of household income, they do like what they see in the short term.

"Consumer confidence increased for the fourth consecutive month as improving business conditions and robust job growth helped boost consumers' spirits," says Lynn Franco, director of economic indicators at the board. "Looking ahead, consumers were marginally less optimistic about the short-term outlook compared to July, primarily due to concerns about their earnings. Overall, however, they remain quite positive about the short-term outlooks for the economy and labor market."

But if Americans see the value of their homes slow down, that could be a game-changer for consumers. Homes represent one of the largest — if not the largest — investment they own.

Read More: Home-Flippers Take Breather Even as Mortgage Rates Decline

Home sales were down by 3% in July and are down 12% on a year-to-year basis, according to RealtyTrac. July's numbers represent the third consecutive month in which home sales are down on a year-to-year level.

Median home prices are up 3%, but home values have slowed in 65% of the nation, RealtyTrac says, as more purchases of pricier homes have hidden weaker pricing activity in midsize and smaller homes.

"As distressed sales continue to decline, the share of sales is tilting toward more expensive homes, boosting the nationwide median sales price," says Daren Blomquist, vice president of RealtyTrac. "The nationwide home price increase, however, masks slowing home price appreciation in the majority of housing markets across the country."

Blomquist says he is not surprised by weakening home values, but it is a situation that bears watching.

"This slowing appreciation was expected and provides another sign that the real estate recovery thus far is behaving rationally," he adds. "Still, the housing market is entering a dicey transition phase where it is becoming much more reliant on first-time homebuyers and move-up buyers to sustain the recovery as investor involvement wanes."

Read More: What It Means to Have Foreclosures at Six-Year Lows

Those "home-flippers" investors are edging away from home purchases as their profits fall, and RealtyTrac reports that only 31,000 single-family homes were flipped in the second quarter of 2014. That's 4.6% of all U.S. home sales, down from 6.2% a year earlier.

But regionally, at least, pricing activity remains strong. Some states, such as Michigan, Virginia and Ohio, did see larger home sales percentages - in fact, annual price jumps of more than 20%, RealtyTrac reports.

Yet with 65% of the nation's housing market reporting stalling home price values, consumers may pay closer attention to their home values. It's not enough to erode confidence in the economy, but slowing home values could play a larger role in consumer sentiment on the economy in the last few months of 2014.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,810.06 +91.06 0.51%
S&P 500 2,063.50 +10.75 0.52%
NASDAQ 4,712.97 +11.1030 0.24%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs