Weakening Economy Hurts Home Sales
A government report on Thursday showed a huge deceleration in new single-family homes sales last month, with a 9.5% falloff from the pace seen in March. The Commerce Department said it was the sharpest slowing in four years. However, analysts said new measuring techniques in the latest report accounted for some of the sales decline.
Separate data showed a wilting labor market, which could further hamper the housing market over the next several months, potentially blunting the economic recovery many had expected after a series of aggressive interest rate cuts by the Federal Reserve.
The slipping labor market is expected to eventually take its toll on the housing market, which has been key in propping up the sagging economy. Lower mortgage rates so far have helped boost home sales, but in recent weeks they too have been creeping up.
``You would think a weakening job market would take some toll on housing demand,'' predicted Dave Seiders, chief economist at the National Association of Home Builders.
The report showed the inventory of houses for sale in April rose to a seasonally adjusted annual rate of 288,000 from a revised 283,000 in March, meaning the supply of available new, single-family homes rose to 3.9 months' worth at the current sales pace, from 3.5 the previous month.
Regionally, the South saw the biggest slowing in sales with a 13.1% drop-off in April from the previous month. Sales in the Midwest slowed by 10.9% and by 6.3% in the Northeast, while edging down 1.4% in West.