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Sales of previously owned homes fall

Sales of previously owned homes fell by 1.7 percent in November, a fresh sign that the high-flying housing market is losing altitude.
/ Source: The Associated Press

Sales of previously owned homes fell by 1.7 percent in November, fresh evidence that the high-flying housing market is losing altitude.

The latest snapshot of activity in the housing market, released by the National Association of Realtors on Thursday, showed that November’s sales of existing homes, including single-family, town homes and condominiums, totaled 6.97 million units at a seasonally adjusted annual rate. It marked the lowest level of sales since March and the second month in a row that sales went down.

In other economic news, the number of new people signing up for unemployment benefits rose last week, but even with the pickup the level of applications still pointed to an improving job climate.

The Labor Department’s report showed that new applications filed for unemployment insurance increased by a seasonally adjusted 3,000 to 322,000 for the week ending Dec. 24. That matched economists’ expectations.

On Wall Street, the Dow Jones industrials were up 20 points in morning trading.

In the housing report, the over-the-month decline was slightly steeper than the 1.3 percent drop that analysts were expecting before the report was released.

Yet, even with the drop, economists said the housing market remains in healthy shape and is on track to set record-high home sales for the fifth year in a row for all of 2005.

“We are really on track for a soft landing,” said David Lereah, the association’s chief economist. Moderately rising mortgage rates are allowing the housing market thus far to land safely, he said. “There are no balloons popping,” he said.

Other housing barometers — including a drop in new-home sales in November — also have flashed signs that the market has peaked and is now slowing.

Thursday’s report also showed that the number of existing homes available for sale rose 1.2 percent in November to a pace of 2.90 million units, the highest level since April 1986.

But that didn’t cool house prices. The median sales price of an existing home stood at $215,000 in November, up a sizable 13.2 percent from the same month last year. The median price is where half sell for more and half sell for less.

The slowing in housing comes as the Federal Reserve has been boosting short-term interest rates for nearly two years. The Fed earlier this month lifted a key rate to its highest level in 4 1/2 years to keep the economy and inflation on an even keel. Another rate increase is expected on Jan. 31.

On the layoffs front, the jobless claims report confirms that the labor market is back on its feet after being knocked around by the Gulf Coast hurricanes. In the middle of September, new applications for jobless benefits surged above the 400,000 mark. Since then, they have slowly drifted downward.

Hiring —which was stifled by the Gulf Coast hurricanes in September and October — rebounded in November as employers boosted payrolls by 215,000, the government had reported earlier this month.

Analysts predict another 200,000 jobs were added in December, and that the unemployment rate will hold steady at 5 percent. The employment report for December will be released next week.

Hurricane Katrina plowed into the Gulf Coast near the end of August, and Rita followed in late September. Wilma struck in late October.

A Labor Department analyst said that the agency, beginning Thursday, would no longer break out the number of weekly job losses related to the hurricanes. Because the impact of the hurricanes on the overall jobless claims numbers has significantly faded, a breakout of the hurricane-related jobless filings was deemed to no longer be warranted, the analyst said.