(Adds details, analyst comments, market reaction)
* Existing home sales rise 1.3 percent in April
* Home price appreciation slows, inventories increase
* Weekly jobless claims up 28,000, but underlying trend firm
By Lucia Mutikani
WASHINGTON, May 22 U.S. home resales rose in
April and the supply of properties on the market hit its highest
level in nearly two years, hopeful signs for the stalled housing
The National Association of Realtors said on Thursday
existing home sales increased 1.3 percent to an annual rate of
4.65 million units, marking only the second gain in sales in
While that was a bit less than the 4.68-million unit pace
economists had expected, it suggested the sector was regaining
its footing after stumbling in the second half of 2013 under the
weight of higher mortgage rates and house prices.
"This report provides the first crucial sign that the
housing recovery may be on the verge of a rebound," said Millan
Mulraine, deputy chief economist at TD Securities in New York.
Sales remain down 15 percent from a peak of 5.38 million
units hit in July. Compared to April last year, sales fell 6.8
Housing is one of the main channels through which the
Federal Reserve is seeking to boost growth via its monthly bond
purchases. The housing slump has prompted Fed Chair Janet Yellen
to caution it could undermine the economy.
Expensive home loans and rising house prices have sidelined
first-time buyers. Investors, who had buoyed the market by
buying homes to rent them out, also are stepping back.
Though an usually cold winter depressed activity, a dearth
of homes for sale also stymied demand. Sales are expected to
gradually trend higher for the rest of 2014 as job growth and
the overall economy accelerate.
Other reports on Thursday showed manufacturing activity
accelerated in May, with financial data firm Markit's "flash"
U.S. manufacturing purchasing mangers index rising to 56.2 from
55.4 in April.
Labor Department data showed initial claims for state
unemployment benefits rose 28,000 to 326,000 last week. The
four-week average, which irons out week-to-week volatility, rose
by only 10,500, indicating the underlying jobs market trend
LABOR MARKET FIRMING
"Initial claims remain in a range that suggests that labor
market conditions are solid and the recent pace of job creation
should continue," said Jim Baird, chief investment officer for
Plante Moran Financial Advisors in Kalamazoo, Michigan.
U.S. stocks rose modestly and the dollar firmed against a
basket of currencies. Prices for U.S. government debt fell.
The firming labor market and easing in mortgage rates should
help to stimulate demand for housing. Last week, the 30-year
fixed mortgage rate hit its lowest level since November.
And there are more reasons to be optimistic about housing.
The inventory of unsold homes on the market increased 6.5
percent from a year-ago to 2.29 million in April. That was the
highest level since August 2012. The median home price rose 5.2
percent, the slowest pace since March 2012.
"The biggest story to come out of this report is the boost
in home inventory, which has been one of the key issues holding
back both buyers and sellers in the first part of this year,"
said Bill Banfield, vice president of Quicken Loans in Detroit.
The month's supply of existing homes increased to 5.9
months, the highest level since August 2012, from 5.1 months in
March. Six months' supply is normally considered a healthy
balance between supply and demand.
(Reporting by Lucia Mutikani; Additional reporting by Jason
Lange; Editing by Paul Simao)