As analysts try to gauge the pace of the economic recovery, they inevitably take the pulse of the housing and job markets. And despite some upbeat trends like stronger retail sales and new reports that showed increases in personal spending, sales of new homes remained at historically low levels last month and the job market showed little sign of momentum. þþThe Commerce Department said on Thursday that sales of single-family homes rose slightly in November but were still well below last year’s levels. Economists said that the market continued to struggle despite low mortgage rates as buyers and builders struggled with an uncertain job market and tighter access to credit. þþThe Labor Department said in a separate report that for the week that ended on Saturday, the number of people applying for first-time unemployment benefits fell by 3,000, to 420,000, the second-lowest number for the year. The figure was largely in line with expectations but would likely have little effect on the overall unemployment rate. þþ“Recent results are horrendous, and most indicators of the housing market point to continued weak conditions in spite of very low mortgage rates,” said Joshua Shapiro, the chief United States economist for MFR. þþSales of new single-family houses rose 5.5 percent to a seasonally adjusted annual rate of 290,000 in November, compared with the previous month, the Commerce Department said. But the rate was more than 20 percent below the 368,000 sales rate in November a year ago, the agency said. October sales were revised lower, to a seasonally adjusted annual rate of 275,000, down from 283,000. þþThe November 2010 rate was also below analysts’ expectations for 300,000. And new-home sales for 2010 show the seasonally adjusted annual revised rate for August was 274,000, the lowest level since such data was compiled starting in 1963. þþIn addition, the actual number of homes sold in November was 21,000, the lowest monthly sales figure on record. Part of the problem is that access to credit is tighter as smaller banks struggle with nonperforming debt, said Patrick Newport, the United States economist for IHS Global Insight. þþ“Builders are saying they cannot finance viable projects,” Mr. Newport said. “From a builder’s point of view, this is the worst month that they have ever had. They have never sold so few homes.” þþEconomists have been watching the Labor Department’s weekly claims for first-time unemployment benefits, hoping that a firmer job market will embolden home buyers. þþDan Greenhaus, the chief economic strategist for Miller Tabak & Company, said that the downward trend in jobless claims was more pronounced than an upward trend in the housing data. þþ“The thing with the homes sales data in general is that they are all at such incredibly depressed levels,” said Mr. Greenhaus. “There is no sustained move upward. We are basically bouncing along for much of 2010 at an all-time low.” þþThe Labor Department said continuing unemployment benefits claims fell to 4.06 million in the week that ended Dec. 11, down from 4.17 million the previous week. The four-week average declined to 4.16 million, from 4.19 million, the department said. þþ“If that continues it is unquestionably a positive,” Mr. Greenhaus said. þþNew-home sales could be helped early next year with a projected decline in interest rates as long as there is stronger employment and income growth, economists said. þþOn Thursday, a report by Freddie Mac, one of the nation’s biggest buyers of home mortgages, said 30-year rates dropped to an average 4.81 percent this week from 4.83 percent a week ago, and 5.05 percent in the same week in 2009. The 15-year fixed mortgage rate averaged 4.15 percent, down from 4.17 percent the previous week and 4.45 percent a year ago, it said. þþEconomists at IHS Global Insight are projecting a further decline of 4.65 percent to 4.7 percent in 30-year fixed mortgage rates in early 2011. þþ“Holding everything else constant, it would marginally help sales,” said Brian A. Bethune, the chief United States financial economist at IHS Global Insight. “But there really isn’t any evidence of any underlying sustained strengthening in the economy.” þþMr. Newport said that the market had been distorted by the government’s $8,000 tax credit, which drew some home buyers into the market. It has since expired. “We have not made much headway in sales and starts for the past 23 months,” Mr. Newport said. þþThe home sales data also showed that sales prices for new homes were falling, a reflection of lower labor costs and the smaller homes and lower prices that builders were using to attract buyers. þþThe median sales price for a new home rose to $213,000, but was down 2.7 percent from November last year. At November’s sales rate, the supply of new homes fell slightly to 8.2 months, with 197,000 new homes for sale, the lowest since March 1968. þþThe real estate market was still a concern of many consumers, according to economists. þþOn Thursday, those worries were partly reflected in a report by Thomson Reuters/University of Michigan, which showed their Consumer Sentiment Index rose 2.9 points to reach 74.5, the highest level since June. þþA strong housing market could affect spending on items like durable goods. A government report said durable goods orders dropped 1.3 percent in November, a larger decline than expected. þþ
Source: NY Times
