Home sales down; labor market stable
WASHINGTON – A cooling housing market may put buyers in the driver’s seat while an improving job market could give workers and jobseekers more leverage, economists say.Either way, analysts read a pair of economic reports Thursday as indicating a soft landing for the high-flying housing sector and a smoother ride for the labor market.Sales of previously owned homes fell for the second month in a row, declining a moderate 1.7 percent in November to an annual rate of 6.97 million units, the lowest since March, the National Association of Realtors reported.”As more listings of homes come on the market during this period of modestly declining sales, more home buyers will find themselves in a better position to negotiate,” said the association’s president Thomas Stevens.Meanwhile, a Labor Department report showed that new applications filed for unemployment insurance last week edged up to 322,000 – a level that is still consistent with a labor market revival, economists said. That report provided further evidence the jobs market is back on its feet after being knocked around by Gulf Coast hurricanes.In the middle of September, new applications for jobless benefits surged above the 400,000 mark. Since then, they have slowly drifted downward and now are back at pre-hurricane levels.In fact the 322,000 level of claims registered last week was slightly better than the 324,000 seen for the corresponding week a year ago.Hiring -which was hampered by the Gulf Coast hurricanes in September and October – rebounded in November as employers boosted payrolls by 215,000.Analysts predict that another 200,000 jobs were added in December, and that the unemployment rate will either hold steady at 5 percent or move down a notch to 4.9 percent. The employment report for December will be released next week.”I think the tide is turning in favor of the employee or jobseeker versus the company,” said Rich Yamarone, economist at Argus Research.A Federal Reserve survey of business conditions around the country, released in late November, offered anecdotal reports of shortages of specially skilled workers – including those in health care, finance and construction – in some markets.In financial markets, the Dow Jones industrials closed down 11.44 points in a listless session.On the housing front, even with the drop in existing-home sales in November, the market remains in generally healthy shape and is on track to set record-high home sales for the fifth year in a row for all of 2005.Moderately rising mortgage rates are allowing the housing market so far to cool slowly, easing fears about a crash, economists said.The average rate on 30-year mortgages in November was 6.33 percent, up from 6.07 percent in October. This week, however, rates on 30-year mortgages dipped to 6.22 percent, Freddie Mac reported Thursday.”The pullback in the housing market is continuing at an orderly pace,” said Joel Naroff, president of Naroff Economic Advisors.Other housing barometers – including a drop in new-home sales in November – also have flashed signs that the market has peaked and is now slowing.Thursday’s housing report also showed that the number of existing homes available for sale rose 1.2 percent in November to a pace of 2.90 million units, the highest level since April 1986.Eventually a growing inventory of homes for sale should help cool prices, analysts said.The median sales price of an existing home stood at $215,000 in November. That was down slightly from $218,000 in October but was up a sizable 13.2 percent from November 2004. The median price is where half sell for more and half sell for less.The slowing in housing comes as the Federal Reserve has been boosting short-term interest rates for nearly two years. The Fed earlier this month lifted a key rate to its highest level in 4 1/2 years to keep the economy and inflation on an even keel. Another rate increase is expected on Jan. 31.Even with expectations that housing – a major supporter of overall economic activity – will slow in 2006, the economy should still log respectable growth next year, analysts said.”The cooling U.S. housing sector should apply a dampener to consumer spending … but some of this could be offset by still-decent job growth,” said Sherry Cooper, chief economist at BMO Nesbitt Burns.—On the Net:Existing-home sales report: http://www.realtor.org/Jobless claims: http://www.doleta.gov/Vail, Colorado
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