Home sales up slightly in December
WASHINGTON — A measure of the economy’s health rose modestly in December, suggesting that growth will remain steady early this year.
Two other reports showed the number of Americans seeking unemployment benefits ticked up 1,000 last week to a seasonally adjusted 326,000, a level consistent with steady job gains, while sales of existing U.S. homes edged up slightly in December.
The Conference Board said Thursday that its index of leading indicators rose 0.1 percent last month. That’s down from a 1 percent gain in November, the month after a partial 16-day shutdown of the federal government.
The index is designed to signal economic conditions over the next three to six months.
The surge in stock prices helped lift the index last month. Worries about upcoming budget battles in Washington could cause businesses and consumers to curb their spending. But Conference Board economist Ken Goldstein said a “better-than-expected holiday season might point to sustained stronger demand and could put the U.S. on a faster growth track in 2014.”
The Labor Department says the four-week average for unemployment claims, a less volatile measure than weekly figures, fell for the third straight week to 331,500. Both figures are close to pre-recession levels and suggest that companies are laying off few workers.
Still, hiring will also need to pick up to make a dent in the still-high 6.7 percent unemployment rate. Many economists forecast that job gains will pick up a bit this year.
“An array of surveys tell us labor demand is rising, and we remain of the view that the underlying trend in payroll growth is slowly picking up,” said Ian Shepherdson, an economist at Pantheon Macroeconomics.
The slight rise in existing U.S. homes in December helped lift sales for the year to the highest level in seven years.
Sales increased to an annual rate of 4.87 million units last month, up 1 percent from the November sales pace, the National Association of Realtors reported Thursday. Both months represented a slower pace of sales than earlier in 2013, reflecting the drag from higher mortgage rates and higher home prices.
For all of 2013, sales totaled 5.09 million, the best performance since 2006, when sales climbed to 6.48 million. However, the sales gains in both 2005 and 2006 represented an unsustainable housing bubble. Analysts say a more normal sales pace currently would be around 5.5 million units.
The median price of an existing home rose 11.5 percent last year to $197,100, the highest in eight years.
Sales of previously owned homes are up 19.5 percent since 2011 but sales fell from September through November and the December level is still 9.6 percent below the summer peak.
“We lost some momentum toward the end of 2013 from disappointing job growth and limited inventory, but we ended with a year that was close to normal given the size of our population,” said Lawrence Yun, chief economist for the Realtors.
Yun expects sales will remain around the 2013 level of 5.09 million in 2014 as such factors as tighter mortgage lending standards and limited inventories impede further progress in the housing market.
But other forecasters are more optimistic. Patrick Newport, an economist at Global Insight, predicted that sales growth would slow a bit from last year’s 8.8 percent rise. He predicted a 5.1 percent increase this year to 5.33 million. He said that would represent a “return to normalcy for this portion of the housing market.”
Total housing inventory at the end of December was down 9.3 percent to 1.86 million existing homes available for sale. That represents a 4.6 month supply at the December sales pace.