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Home / Business / U.S. home sales, manufacturing stumble; lab market strong By Reuters

U.S. home sales, manufacturing stumble; lab market strong By Reuters




© Reuters. FILE PHOTO: A new apartment building is being built in Los Angeles

By Lucia Mutikani

WASHINGTON (Reuters) – Sales of New US single-family homes fell from near at 11-1 / 2-year high in April as prices decelerated and manufacturing activity slowed to its lowest level in May, pointing to a slowdown in economic activity.

But other data on Thursday showed the number of Americans filing claims for unemployment. Labor market strength should support the economy, which is slowing down as last year's massive stimulus from the Trump administration's tax cuts and spending increases.

The Commerce Department said: "The Commerce Department has dropped 6.9% to a seasonally adjusted annual rate of 673,000 units month. This is March 1

9, 2007, which was the highest level since October 2007.

Economists polled by Forecaster for 10% of housing market sales, would decrease 2.8% to a pace of 675,000 units in April.

Sales increased 7.0% from a year ago.

New home sales has recently outperformed other housing market indicators, including building permits, which had dropped for five straight months in April. New home sales are drawn from permits.

Economists attributed the recent strength in new home sales to declining mortgage rates and lower prices. The new housing market has not been severely constrained by an inventory shortage, which has crippled sales of previously owned homes.

A report on Tuesday showing a few months in April, weighed down by a chronic shortage of more affordable houses.

The overall housing market hit a soft patch year and has contracted for five straight quarters. With the labor market strong and the 30-year fixed mortgage rate dropping to around 4.07% from near to eight-year high of 4.94% in November, there is reason to be cautiously optimistic about the housing market.

Treasury prices were trading higher and the dollar was stronger against a basket of currencies.

TIGHTENING LABORATORY MARKET

In a separate report on Thursday, the Labor Department said: "It's the third straight-line drop in claims."

Economists had forecast claims would rise to 215,000 in the latest week. The Labor Department said no states were estimated last week. The four-week moving average of initial claims, considered as a better measure of labor market trends as it falls out of week-to-week volatility, dropped 4,750 to 220,250 last week.

Last week's claims data covered the survey period for the nonfarm payroll's component of May's employment report.

The four-week average of claims increased 18,750 between the April and May surveys periods, suggesting some moderation in employment gains after payrolls surged by 263,000 jobs last month. The unemployment rate is at 3.6 percent.

Continuing strength in labor market conditions, marked by the lowest unemployment rate in nearly 50 years,

Economy received a temporary boost from volatile exports and inventory accumulation in the first quarter. Retail sales and production factories fell in April.

In a third report, data firm Markit on Thursday. manufacturing PMI declined to 50.6 from a final reading of 52.6 in April, marking the lowest level since September 2009. A reading above 50 indicates growth in the manufacturing sector, which accounts for about 12% of the U.S. economy.

That together with the sluggish housing market have led economists to anticipate that gross domestic product would come in below a 2.0 percent annualized rate. The economy has grown to 3.2 percent pace in the first quarter.

Last month's drop in new home sales was almost across the board. Sales in the South, which accounts for the bulk of transactions, declined 7.3% in April. Sales in the Midwest dropped 7.4% and those in the West tumbled 8.3%. But sales in the Northeast jumped 11.5%.

There were 332,000 new homes on the market last month, down 0.9% from March.

At April's sales pace it would take 5.9 months to clear the supply of houses on the market, up from 5.6 months in March.

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