Feeling better, but for housing

A day after strong "Cyber Monday" sales, a monthly survey from the Conference Board provided another hint of optimism about a recovery.

The Conference Board's consumer sentiment index rose to a reading of 54.1 for November, the highest level since June and higher than expectations for a reading of 53. The survey, which is based on a sample of 5,000 U.S. households, is often closely followed by investors and economists alike, as a gauge of consumer spending. Consumer spending makes up about two-thirds of the U.S. economy.

November's reading is "a welcome sign as we enter the holiday season," said Lynn Franco, Director of The Conference Board Consumer Research Center. "Hopefully, the improvement in consumers' mood will continue in the months ahead." October's reading was revised down to a reading of 49.9 from a previously reported 50.2.

While consumers' moods may be improving slightly, the housing market is a continued concern for many experts, and for good reason. U.S. home prices fell 0.7% in the September from August, according to the S&P/Case-Shiller home price index of 20 major cities. Prices are up 0.6% from September 2009, which was the smallest year-over-year gain since January and much smaller than the 1.7% increase seen in August.

“The national economy is certainly the number one issue for housing," said David M. Blitzer, Chairman of the Index Committee at Standard & Poor's. “Additionally, there is a large supply of houses on the market and further, hidden, supply due to delinquent mortgages, pending foreclosures or vacant homes. New construction is running at less than half the pace needed to meet normal demand, so a sustained recovery could be a ways off.”

The oversupply to which Blitzer referred is causing the double-dip concern. "As prices go down, more people get underwater, leading people to walk away," Gary Shilling, President of investment research firm A. Gary Shilling & Co., told Reuters. Banks will end up with more write-downs, Shilling predicted, which "will be Act II in the whole drama of the housing collapse."

In September, prices fell in 18 of the 20 metropolitan areas tracked by the index; in August, only 15 metro areas saw price declines.