U.S. home prices rise, service sector expands but consumer sentiment dips

Tue Feb 24, 2015 12:39pm EST
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By Ryan Vlastelica and Michael Connor

NEW YORK (Reuters) - U.S. home prices rose again in December and activity in the services sector expanded in February at its fastest pace since October, but a gauge of consumer confidence fell, according to reports published on Tuesday.

Federal Reserve chairman Janet Yellen also noted on Tuesday that the slowly improving U.S. economy may lead to a rise in interest rates later this year in testimony she gave to Congress.

U.S. single-family home prices rose in December, led by strong increases in the western half of the United States, a closely watched survey said.

The S&P/Case Shiller composite index of 20 metropolitan areas gained 4.5 percent in December from the prior year. This was above a Reuters poll of economists that forecast a rise of 4.3 percent, as well as the 4.3 percent growth rate in November.

"While prices and sales of existing homes are close to normal, construction and new home sales remain weak," David Blitzer, chairman of the index committee at S&P Dow Jones Indices, said in a statement.

"The softness in housing is despite favorable conditions elsewhere in the economy: strong job growth, a declining unemployment rate, continued low interest rates and positive consumer confidence."

However, Toll Brothers Inc (TOL.N: Quote), the largest U.S. luxury homebuilder, reported a higher-than-expected quarterly profit on Tuesday and raised the low end of its full-year home delivery forecast.

The company now expects to deliver 5,200 to 6,000 homes in 2015 at an average price of $725,000-$760,000. It had earlier forecast deliveries of 5,000 to 6,000 homes at $710,000-$760,000.   Continued...

A real state sign is seen near a row of homes in the Haight Ashbury neighborhood in San Francisco, California July 17, 2014. REUTERS/Robert Galbraith