Home Prices Decline, Consumers Still Gloomy

Reuters reports:

The drastic plunge in home prices continued to level off in April, hinting at stabilization in the housing market, but job market worries pushed consumer confidence to a seven-month low in June.

Although house prices were helped by the start of the spring selling season, data showed on Tuesday, economists cautioned prices will likely continue to crawl along at low levels because of the unusually large number of homes up for sale and ongoing foreclosures.

"The degree of hemorrhaging seems to be slowing," said Anthony Chan, chief economist at JPMorgan Private Wealth Management in New York.

"The patient is still bleeding and will be bleeding until we get all that distressed and shadow housing market inventory down to smaller levels."

While housing makes up a fraction of the U.S. gross domestic product, weak prices also constrain consumer spending, and most economists expect the economy will be hard pressed to make a sustainable recovery without an improvement in home prices.