June 30th, 2009
01:15 PM ET

Financial Dispatch: Home prices drop, but at a slower rate

[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2009/images/03/10/foreclosure-sign-getty.jpg]

Andrew Torgan
CNN Financial News Producer

We have new signs this morning that the housing market may finally be hitting bottom.

Home prices continued to tumble in April, falling more than 18% from a year earlier. But the month-over-month change narrowed sharply, indicating that housing markets may be starting to turn a corner.

The 20-city slice of the S&P/Case-Shiller Home Price Index recorded a drop of 0.6% from March to April, compared with a 2.2% drop in the prior month. The index has declined every month since July 2006.

And while S&P’s David Blitzer cautions that one month's data cannot determine if a turnaround has begun, some stabilization may be appearing in some regions.

Consumer confidence drops

On the flip side, however, consumer confidence fell unexpectedly in June after two straight months of gains as Americans' optimism over business and job conditions weakened.

The Conference Board, an industry group, said this morning that its index of consumer attitudes dropped to 49.3 this month from a downwardly revised 54.8 in May. Wall Street was expecting a reading of 55.0 for June.

GM makes its case for 'new GM'

General Motors is set to press a bankruptcy judge today to approve its plan to leave its debt behind as it sells its preferred assets to a "new GM."

GM, which filed for bankruptcy protection on June 1, is trying to win approval to create a new company and shed crushing debt and expensive contracts.

U.S. taxpayers would end up owning 60% of the new GM, with other stakes held by Canadian governments, bondholders and the United Auto Workers union.

Holders of $27 billion in GM bonds would get stock in the reorganized company, as will a union-controlled trust fund that will take stock rather than the $20 billion in cash it had been owed to pay future retiree health care costs. Those 650,000 retirees will have their coverage reduced.

GM also plans to close more than a dozen factories, drop several brands and shut down up to 40% of its network of 6,000 dealerships.

Detroit joblessness tops among big cities

The unemployment crisis is a nationwide concern, but the collapse of the auto industry has made Detroit joblessness particularly painful.

A government report released today shows the Detroit metro area continued to have the highest unemployment rate of large cities, at 14.9%, in May. That number was calculated even before General Motors declared bankruptcy, meaning future reports could be even worse.

The overall report from the Labor Department was also bleak. All 372 metropolitan areas saw unemployment rates tick higher, with 112 cities at 10% or higher, and 15 of those at 15% or more. The highest rate of unemployment for a metro area of any size was in El Centro, Calif., near the Mexican border, at 26.8%.

Filed under: 360° Radar • Andrew Torgan • Economy • Finance • Housing Market
soundoff (8 Responses)
  1. RLWellman

    You would never guess that our country is in trouble by the way the Government is enlarging it's ranks, passing garbage bills, giving themselves raises, and spending more money by this administration then all other administrations combined.

    July 1, 2009 at 8:53 am |
  2. Mari

    When Obama took Office in January the jobless rate was ........ 8%.
    It is now 9%.

    Homes are selling where I live. There are some great deals and the wise people who have saved and are prudent and buying!

    Federal Reserve chairman Ben Bernake, calls this "The Great Recession" ....... I call it the "Bush Disaster".

    It will take time for America to dig itself out this time. The last terrible recession was the "Twin Recessions of '81 & '82" during Reagan.
    We recovered eventually and will again.

    But this time, Congress has to place some tough regulations on the books, to keep Wall Street and the banks from running amok again!

    June 30, 2009 at 7:13 pm |
  3. A.M. Deist, Fort Walton Beach, FL

    Unfortunately, if you start off at one side of a large room and each time you take a step, you half the distance of the previous step, you will never reach the other side of the room. This is where we are in our economy. To say that we are improving because we lost less jobs, or there were less foreclosures than last month is just short of insane.

    June 30, 2009 at 7:06 pm |
  4. Annie Kate

    The jobless rate continues to concern as job creation does not seem to have happened much at all yet. Where are all the jobs that were suppose to be created? If they are delayed will unemployment insurance payments be extended more to help lessen the impact on the families of the unemployed? So far all we have heard are words – very little action or impact has been seen and that is what we need – jobs not words.

    June 30, 2009 at 4:27 pm |
  5. Agatha

    Where I am, there are $300,000 homes for $90,000. We've gotten opinions from realtors and they're saying the same/similar things as this article.

    Rental properties are selling like hotcakes in my area. Homes are going the first day they come on sale. Literally within a few hours there's an offer.

    June 30, 2009 at 3:53 pm |
  6. Tim Gibson

    How long have we heard, finally hit bottom? Are we not simply bouncing off the sides of the sink hole of our economy.

    June 30, 2009 at 2:56 pm |
  7. earle,florida

    The S&P Case-Shiller Home Price Index is a very accurate measurement of the economy,with the brain-trust Mr. Shiller (renowned economist from ,"Yale") having the greatest of respect,and integrity over-seeing! If he says were turning a corner,I believe him,period! But, the"Consumer Confidence Board",regarding the "Index of Consumer Affairs/Confidence" has always been a highly volitile barometer going from negative numbers,to positive numbers,similar to a manic-depressant off his/her med's! Really,this index is a non-factor,a non-starter,just more useless data that scrambles the obvious! What should be encouraging is "GM's" progress in the bakruptcy courts,which will get our country on the right path to a more viable future in "Green Automotive Technology". Finally,I would be remiss not to mention that the,"Iraqi Oil/Gas Field's Auction"started today in Baghdad that has drawn alot of strong foreign interest from approx. thirty-one oil companies. The biggies involved are Exxon-Mobil(US),Anglo Dutch Shell (US/Foreign conglomerate) Conoco(US/UK),Sinopec of China,Total of France,and others from Russia(?),Indonesia,India,and S.Korea. But,what's worth noting is the fact that a BP-led consortium (US ,controlling partner) has accepted a contract from Baghdad to develop the largest oil field,the "Southern Rumaila Field"? Just the current (news on the back-pages) days facts,hope it wasn't to off-subject,....

    June 30, 2009 at 2:06 pm |
  8. JC- Los Angeles

    Once the Alt-A and Option ARM loans start to readjust, the free fall of the real estate market will accelerate and the damage will be unfathomable.

    The middle class and upper middle class will feel this punch to the gut since job loss, heavy debt loads and career implosions will leave them no choice but to foreclose.

    The gap between the wealthy and everyone else will widen to unprecedented levels; not much of a recovery.

    June 30, 2009 at 1:54 pm |