US housing, jobs data weaken, but overall economic picture still upbeat
Saturday, 21 December 2013 00:00
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REUTERS: US home re-sales hit a near one-year low in November and new filings for unemployment benefits unexpectedly rose last week, putting a wrinkle in an otherwise brightening economic picture.
The reports on Thursday came a day after the Federal Reserve gave the economy a vote of confidence by announcing that it would reduce its monthly $ 85 billion bond buying program by $ 10 billion starting in January.
“Things have not changed. It’s still a marginally rosier outlook in the short-term,” said Jacob Oubina, senior US economist at RBC Capital Markets in New York.
The National Association of Realtors said sales of previously owned homes fell 4.3% last month to an annual rate of 4.90 million units. That was the lowest since December last year and the third straight monthly drop.
A rise in interest rates since the spring and fast-rising home prices have shut some potential buyers out of the market, dampening home sales in recent months.
Economists polled by Reuters had expected home re-sales to fall only to a 5.03 million-unit pace in November.
Housing market fundamentals, however, remain solid. Household formation is rising steadily from multi-decade lows, which in turn is keeping demand for housing supported and encouraging builders to undertake new projects.
Median home prices increased 9.4% from a year-ago and the share of distressed properties - foreclosed and short sales - declined over the same period.
The inventory of previously owned homes on the market slipped 0.9% to 2.09 million units, representing a 5.1 month supply at November’s sales pace. That compared to 4.9 months’ worth in October. A 6.0 months’ supply is normally considered healthy.
“We are starting to reach a point where we are seeing a shift from a speculative investor driven recovery to one that is going to be more represented by the traditional buyers and sellers that make housing decisions based on lifestyle,” said Budge Huskey, Chief Executive Officer at Coldwell Banker Real Estate in Madison, New Jersey.
Stocks on Wall Street were little changed after rallying the prior session. US Treasury debt prices fell, while the dollar rose against a basket of currencies.
In a separate report, the Labour Department said initial claims for state unemployment benefits increased 10,000 last week to 379,000, the highest level since March.
But other labour market indicators have pointed to a strengthening in job growth, and economists discounted the data, which covered the period for the Government’s December nonfarm payrolls survey.
