Sales of existing US homes fell 1.7 percent in November to a 6.97 million unit annual rate as inventories climbed, indicating a rally in the US housing market has begun to wane, a trade group said on Thursday.
An index of Midwest business activity, also released on Thursday, was higher than expected and pointed to solid growth. Key components such as employment and new orders were both stronger in the December data.
The National Association of Purchasing Management-Chicago business index "is a very strong report overall, reflective of the manufacturing sector rebounding through the fourth quarter," said Richard DeKaser, chief economist, National City Corp, Cleveland. "There are two factors; there is the better-than-expected growth in demand post-hurricane and the ... the low level of inventory."
Separate reports showed first-time claims for jobless pay rose last week while the number of help-wanted ads in US newspapers increased modestly in November.
November's existing-home sales rate compared with an unrevised 7.09 million unit pace in October and marked the first time the sales pace has dipped below 7 million units since March, the National Association of Realtors said.
The existing homes figure includes both single-family homes and condominiums.
Analysts had expected overall sales to decline to a 7.00 million unit pace in November.
Low mortgage rates supported a five-year rally in the US housing market, leading to record-shattering construction, sales and price increases. But as rates began to rise in September, the housing market has shown some signs of cooling.
According to Freddie Mac data cited by the Realtors, average 30-year fixed mortgage rates were 6.33 percent in November, up from 6.07 percent in October and 5.73 percent a year ago.
Lereah said the gradual rather than sharp increase in mortgage rates was helping to keep the slowdown in housing moderate. That, combined with a growing economy and demographic trends that support demand, should provide a soft landing for housing, he said.
Existing homes available for sale in November jumped 1.2 percent to 2.903 million -- the biggest supply since April 1986, when inventories hit 3.04 million units, the group said.
November's inventory level equates to 5 months' supply of homes for sale at the current sales pace -- the highest level since June 2003. Still, Lereah called supply "lean."
Existing home sales declined throughout the country. Condo sales fell 0.8 percent to a 857,000 unit pace while single-family home sales fell 1.9 percent to a 6.1 million unit pace, the group said.
The national median existing-home price in November was $215,000, up 13.2 percent from a year ago.
The Labour Department said initial claims for state unemployment insurance benefits rose to 322,000 last week from an upwardly revised 319,000 in the prior week.
That was modestly higher than Wall Street economists' forecasts for 320,000 claims but the prior week's claims figure was revised up from an originally reported 318,000 so the rise in claims was not far from expectations.
The closely watched four-week moving average of new claims, designed to flatten the volatility in the weekly numbers to provide a clearer picture of the job market, edged up to 325,000 in the week ended December 24 from 324,750.
The number of continued claims - a measure of how many people remained on benefit rolls after drawing an initial week of aid -- rose for a third straight week. These claims were up 85,000 to 2.72 million in the week ended December 17, the latest week for which these figures are available.
The number of help-wanted ads in US newspapers rose modestly in November, signalling job growth is unlikely to pick up considerably from its subdued recent average, a private research firm said on Thursday.
The Conference Board said its gauge of help-wanted ad volume in the United States climbed to 39 last month, in line with analyst forecasts and compared with 38 in October.
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