Housing, jobs data weaken, but overall economic picture still upbeat

Thu Dec 19, 2013 1:46pm EST
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By Lucia Mutikani

WASHINGTON (Reuters) - U.S. home resales hit a near one-year low in November and new filings for unemployment benefits unexpectedly rose last week, putting a wrinkle in an otherwise brightening economic picture.

The reports on Thursday came a day after the Federal Reserve gave the economy a vote of confidence by announcing that it would reduce its monthly $85 billion bond buying program by $10 billion starting in January.

"Things have not changed. It's still a marginally rosier outlook in the short-term," said Jacob Oubina, senior U.S. economist at RBC Capital Markets in New York.

The National Association of Realtors said sales of previously owned homes fell 4.3 percent last month to an annual rate of 4.90 million units. That was the lowest since December last year and the third straight monthly drop.

A rise in interest rates since the spring and fast-rising home prices have shut some potential buyers out of the market, dampening home sales in recent months.

Economists polled by Reuters had expected home resales to fall only to a 5.03 million-unit pace in November.

Housing market fundamentals, however, remain solid. Household formation is rising steadily from multi-decade lows, which in turn is keeping demand for housing supported and encouraging builders to undertake new projects.

Median home prices increased 9.4 percent from a year-ago and the share of distressed properties - foreclosed and short sales - declined over the same period.   Continued...

An existing single family home which is up for sale is pictured in Burbank, California December 15, 2011. REUTERS/Fred Prouser