WASHINGTON: The number of Americans filing for unemployment benefits rose from a 45-year low last week. The jump in jobless claims was, however, less than expected, and the underlying trend remained consistent with a tight labour market that is helping to underpin demand for housing.
Other data on Thursday showed sales of new US single-family homes fell more than expected in December, recording their biggest drop in nearly 1-1/2 years, likely as the boost from the replacement of flood-damaged houses in parts of the South affected by hurricanes faded.
“We expect demand for single-family housing to remain robust, driven by job gains and the ageing of the millennial generation into prime homebuying ages,” said Ben Ayers, senior economist at Nationwide in Columbus, Ohio.
The Commerce Department said new home sales declined 9.3 per cent to a seasonally adjusted annual rate of 625,000 units last month. The per- centage decrease was the largest since August 2016. Unseasonably cold temperatures at the end of December probably also hurt sales.
Economists polled by Reuters had forecast that new home sales, which account for 10.1 per cent of the housing market, would tumble 7.9 per cent to a pace of 679,000 units last month.
Sales plunged 9.8 per cent in the South last month after a 6.6 per cent surge in November that was tied to rebuilding after the devastation caused by Hurricanes Harvey and Irma. They fell 10 per cent in the Midwest and dropped 2.4 per cent in the Northeast — both regions experienced unusually cold weather in late December. In the West, sales fell 9.5 per cent.
Pointing to underlying strength in the housing market, new home sales surged 14.1 per cent from a year ago. They increased 8.3 per cent in 2017 to 608,000 units, the highest level since 2007.
The strong labour market, which is near full employment, has unleashed demand for housing that has not been matched by supply. As a result, house price inflation has outpaced wage growth, keeping some first-time home buyers out of the market. The median new house price rose 2.6 per cent to a record $335,400 in December from a year ago.
While the stock of new homes on the market increased 3.9 per cent in December to 295,000 units, more than an 8-1/2-year high, it remained below its peak of 572,000 units in July 2006.
At December’s sales pace it would take 5.7 months to clear the supply of houses on the market, up from 4.9 months in November. A six-month supply is viewed as a healthy balance between supply and demand.
TIGHT LABOUR MARKET: The Labor Department said initial claims for state unemployment benefits increased 17,000 to a seasonally adjusted 233,000 for the week ended January 20. Claims fell to 216,000 in the prior week, the lowest level since January 1973.
Economists had forecast claims rising to 240,000 in the latest week. Last week marked the 151st straight week that claims remained below the 300,000 threshold, which is associated with a strong labour market. That is the longest such stretch since 1970, when the labour market was much smaller. — Reuters
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