OPTIMISM IN US REAL ESTATE MARKET

       Home values in 20 US metropolitan areas probably decreased at a slower pace and consumer confidence climbed, signs the recession is easing as the real-estate crisis dissipates, economists said this week.
       The Standard & Poor's (S&P)/Case-Shiller Home-Price Index fell 16.4 per cent year on year in June, the smallest drop in almost a year, a median forecast of 31 economists surveyed showed. A report from the Conference Board may show confidence Board may show confidence rose this month for the first time in three months.
       Lower prices and government stimulus efforts have made homes more affordable to firts-time buyers, spurring increases in sales that will eventually stem the slide in property values. Gains in housing and stocks will speed the process of restoring the record loss of wealth that has shackled consumer spending, which accounts for 70 per cent of the US economy.
       "Home sales are on the way up, building has bottomed, and home prices are the last ditch," said John Herrmann, president of Herrmann Forecasting in Summit, new Jersey.
       "The rate of declines in prices is abating so rapidly that we could bottom out by next year. The recovery is starting."
       Before the S&P/Case-Shiller figures were released, estimates in a Bloomberg syrvey ranged from declines of 15.7-17.1 per cent. Year-on-year records for the gauge, which was down 17.1 per cent year on year in May, began in 2001, and the measure has fallen each month since January 2007.
       Foreclosures represent one risk to a sustained improvement in values as more properties are thrown into an already-flooded market. Americans fell behind on mortgage payments at a record pace in the second quarter, said the Mortgage Bankers Association. The inventory of homes in foreclosure rose to its highest point in three decades of data. Rising unemployment may also limit demand for housing.
       At the same time, there are signs the worst of the crisis is over. Existing home sales last month jumped to their highest level in almost two years, boosted by lower prices, tax credits for first-time buers and near-record-low borrowing costs, figures from the National Association of Realtors showed.
       Figures for new-homw sales, due soon from the Commerce Department, probably rose last month for the fourth straight month, economists predicted.
       Demand has already improved enough for some construction companies to consider cutting back on discounts and incentives. Toll Brothers, the largest US builder of luxury homes, said contracts have risen year on year so far this quarter, for the first time since 2005.
       "As the supply of unsold housing inventory shrinks nationwide, and it consumer confidencke continues to improve, we should see stronger demand," said CEO Robert Toll. "It has already positively impacted our pricing power, as we are reducing incentives in many markets."