U.S. existing home sales notched their third monthly rise in June in a sign the housing industry was slowly healing, but new jobless claims rose last week in a move distorted by unusual seasonal layoffs.
U.S. stocks pushed sharply higher on the home sales data, with the Dow Jones industrial average <.DJI> adding over 100 points as investors took heart that a turn in the housing market would underwrite a broader economic recovery this year.
The National Association of Realtors said on Thursday that sales in June rose 3.6 percent to an annual rate of 4.89 million units, from a downwardly revised 4.72 million pace in May. Last month's reading compared with forecasts for a 4.84 million unit annual pace.
The NAR said it was the first time the industry had experienced three straight months of gain since early 2004, providing hope the higher data indicate an underlying trend.
Overall, the news is positive. We have increasing home sales for the third straight month, declining inventory and although prices fell, they declined at a less steep pace, Lawrence Yun, NAR chief economist, told a press conference.
The housing market is healing after four years of recession, he said.
The inventory of existing homes for sale declined 0.7 percent to 3.82 million in June. The median national home price fell 15.4 percent to $181,800 from the same period a year ago. But this was up 4.0 percent compared with the month before and the highest reading since October.
The months supply of home for resale is coming down and home prices are falling at a slower pace overall providing more evidence that the housing market is stabilizing, said Torsten Slok, a senior economist at Deutsche Bank in New York.
NAR's Yun said that the inventory of previously owned homes for sale represented 9.4 months' supply at the current pace of sales, down from 9.8 months' in May.
This was still above the historic average of six months' supply, which Yun said was consistent with a national price appreciation of around 4.0 percent. Seven to eight months' supply would be consistent with no change in median prices, he said.
In a separate release on Thursday, the U.S. Labor Department said that seasonally adjusted initial claims rose 30,000 to 554,000 in the week ended July 18, which was roughly in line with analyst forecasts.
But a department official noted that the data in July was being distorted by an unusual pattern of seasonal layoffs, that he expects will fade in the next week or so.
The Labor official said there were more layoffs than anticipated based on past experience in adjusted claims in the automotive sector and elsewhere in manufacturing, following two weeks when there had been fewer layoffs.
So-called continued claims of people still on jobless aid after an initial week of benefits fell by 88,000 to 6.225 million in the week ended July 11, the latest for which data is available. Analysts had expected continued claims to be 6.32 million.
The 'seasonal factors' the department uses to adjust the data to provide a better sense of the underlying trends had expected a large decrease in initial claims. Actual claims fell by less than expected, in part because they had risen by less than anticipated in the previous two weeks, and this amplified the rise.
In another gauge of labor market health, the 4-week moving average for new claims fell to 566,000 from 585,000 the previous week. This measure is closely watched because it is supposed to iron out weekly volatility. It has now fallen for four straight weeks.
Right now it is difficult to say until we are out of this four-week period in July where things really are, but my gut feeling is things are improving but not at a rapid pace, said Rudy Narvas, a senior analyst at 4cast ltd in New York.
(Additional reporting by Chris Reese in New York)