Housing Prices Continue to Fall;
Consumer Confidence Declines

U.S. consumer confidence fell for a third month in a row in October, weighed down by a further weakening in business conditions, according to a report released Tuesday.

Meanwhile, home prices fell nationwide in August for the eighth consecutive month, offering little hope of a turnaround anytime soon, according to the S&P/Case-Shiller index released Tuesday.

The Conference Board, a private research group, said that its index of consumer confidence for October moved to 95.6 from a slightly downwardly revised 99.5 in September and 105.6 in August.

Economists had expected the October reading to fall to 99. September's reading was originally reported at 99.8.

The present situation index, a gauge of consumers' assessment of current economic conditions, fell to 118.8 in October from a downwardly revised 121.2 in September.

Consumer expectations for the state of economic activity over the next six months also fell, to 80.1 in October from a reading of 85 the prior month.

Consumer confidence "continues to hover at two-year lows," said Lynn Franco, director of the conference board consumer research center. "Further weakening in business conditions has, yet again, tempered consumers' assessment of current-day conditions and may very well be a prelude to lackluster job growth in the months ahead."

Also, consumers are growing even more pessimistic about the short-term future, Franco said, and "their rather bleak outlook suggests a less than stellar ending to this year."

The report also showed that survey respondents calling current economic conditions "good" decreased to 23.4% in October from 25.7% in September. Those saying conditions were "bad" also fell, to 16.3% from 17.8%.

Consumers were less upbeat on the labor market, according to the report. Those calling jobs "plentiful" fell to 24.1% in October from September's 25.6%, while those describing jobs as "hard to get" rose to 22.6% from 22.4%.

Meanwhile in October, the outlook for the labor market was also less optimistic. The number of consumers anticipating fewer jobs in six months increased to 20.1% from 18.7% in September, while the percentage of consumers expecting more jobs in the months ahead was virtually unchanged at 13.5%.

The Conference Board also reported that in October, those expecting business conditions to worsen in the next six months rose to 13.8% from 11.9%, and those expecting conditions to improve dipped to 13.7% from 15.7%.

The percentage of consumers expecting their incomes to increase in the months ahead also declined moderately to 19.6% in October from 20.0% in September.

The Conference Board survey is based on a mail-in survey of 5,000 households. The cutoff date for responses was Oct. 23.

Home Prices Decline

Things could get worse, said Yale economist Robert Shiller, who helped create the index. "There is really no positive news in today's report," said Mr. Shiller, chief economist for MacroMarkets LLC, which collaborates with Standard & Poor's Corp. on the indicator. "At both the national and metro area levels, the fall in home prices is showing no real signs of a slowdown or turnaround."

Home prices as measured by the index have fallen by more every month since the beginning of the year. August is the 21st month of decelerating returns.

An index of 10 U.S. metropolitan areas fell 5% in August from a year ago. That was the biggest drop since June 1991. The lowest ever was a decline of 6.3% in April 1991.

A broader index of 20 metropolitan areas fell 4.4% in August over last year, with 15 of 20 of them reporting that prices fell.

Housing prices have been a key worry for consumers, and the effect of the slowdown alongside the summer's steep decline in credit availability, has many worried that the economy will go into recession.

Many economists expect the Federal Reserve will cut rates again at the end of a two-day meeting starting Tuesday, after a bigger-than-expected half-point cut last month.

Notably, eight of the 20 metropolitan areas in the Case-Shiller index showed their lowest annual returns ever recorded in August. The report showed drops in Cleveland of 4.1%; Las Vegas, 7.6%; Miami, 7.8%; Minneapolis, 4%; Phoenix, 8%; San Diego, 8.3%; Tampa, Fla., 10.1%; and Washington, D.C., 7.2%.

Tampa surpassed Detroit as the worst performing city. Detroit had a 9.3% drop over last year. The index is designed to track prices of typical single-family homes.

The National Association of Realtors said sales of existing homes fell 8% in September, the largest decline since 1999. The median price -- the point at which half the homes sold for more and half for less -- fell to $211,700 in September, down 4.2% from a year ago.

-- Associated Press contributed to this article.

Email your comments to rjeditor@dowjones.com.