U.S. housing, jobs data point to fairly strong economy
By Lucia Mutikani
WASHINGTON (Reuters) - U.S. home resales rebounded strongly in September and new applications for unemployment benefits hovered around 42-year lows last week, pointing at solid domestic fundamentals even as the global economy falters.
Thursday's upbeat housing and labor market reports could keep the door open to an interest rate hike from the Federal Reserve by the end of the year.
"The market has been a little bit quick to price out a December Fed rate hike. What you are seeing in the data is that the domestic picture looks strong and I think that's what the Fed is going to be looking at closely," said Thomas Costerg, a U.S. economist at Standard Chartered Bank in New York.
The National Association of Realtors said existing home sales increased 4.7 percent to an annual rate of 5.55 million units last month, almost erasing August's decline.
A firming housing market is boosting household wealth, driving a robust pace of consumer spending. In turn, strong domestic demand is helping to cushion the blow on the economy from softening global growth, a strong dollar and weak capital spending in the energy sector.
Growth has also been squeezed by efforts by businesses to reduce an inventory bulge, leaving gross domestic product growth estimates for the third quarter running below a 1.5 percent annualized rate. The economy grew at a 3.9 percent rate in the second quarter.
Housing, however, remains constrained by a dearth of properties available for sale. But rising house prices could encourage homeowners to put their houses on the market.
The median price for a previously owned home rose 6.1 percent in September from a year ago. Realtors and economists say insufficient equity has contributed to the tight housing inventories. Continued...