WASHINGTON (Reuters) - Sales of previously owned homes in the United States unexpectedly fell for the first time in four months in August, indicating a less vigorous pace of economic recovery from a deep recession.
The sales drop overshadowed other data showing a fall in the number of U.S. workers who filed new jobless benefits claims last week.
Separately, central banks in the United States and Europe on Thursday moved to scale back massive injections of dollars into the banking system as financial markets stabilize after the worst global financial crisis since the 1930s.
The National Association of Realtors (NAR) said sales of existing U.S. homes fell 2.7 percent to an annual rate of 5.10 million units, disappointing market expectations for a rise to a 5.35 million unit pace. That was the first fall since April.
Another report from the U.S. Labor Department showed new claims for unemployment benefits unexpectedly fell 21,000 to a seasonally adjusted 530,000 last week. Analysts polled by Reuters had expected initial claims to rise to 550,000.
The housing report did little to change views the economy is recovering from its worst recession in 70 years but raised doubts about how long the rebound will last.
“Everyone knows the third quarter (economic growth) is going to be very good, the question is how sustainable is this recovery and will the housing market be able to fly on its own once the emergency government aid is removed,” said Zach Pandl, an economist at Nomura Securities International in New York.
The Federal Reserve -- the U.S. central bank -- on Wednesday acknowledged activity had picked up and noted the improvement in the housing sector when it left its key overnight lending rate near zero.
A top White House economic adviser, Christina Romer, said on Thursday the U.S. economy was “back from the brink”, but warned policy-makers against removing fiscal and monetary stimulus too quickly.
Stocks on Wall Street dropped on the homes report and worries that authorities might be curbing stimulus too soon. Government bond yields fell as the data strengthened perceptions the economic recovery could falter once stimulus from government spending fades.
Leaders of the G20 group of rich and developing nations were gathering in Pittsburgh on Thursday to discuss ways of rebalancing the world economy to prevent another banking crisis and recession.
SELF-SUSTAINING RECOVERY SOUGHT
U.S. home sales have been boosted in recent months by an $8,000 government tax credit for first-time buyers and an improving economic picture as well as the lowest prices and mortgage rates in decades.
The tax credit expires at the end of November and NAR chief economist Lawrence Yun said the industry group was lobbying to have it extended into next year to avoid what he called a double-dip recession for the housing market.
A housing sector collapse was the main force behind the recession, which started in December 2007.
“The housing market is close to reaching a point of self-sustaining recovery. We are pushing for the extension of the tax credit so that we achieve this,” Yun told reporters.
The decline in August sales was a minor retreat after a strong rise in July, Yun said, and issues related to appraising home values could have led to delays or cancellations of contracts to buy homes. Pending sales contracts rose in July.
Despite the monthly decline, August’s sales pace was the second-highest in 23 months, and sales of previously owned homes rose 3.4 percent compared to August last year.
The August national median home price of $177,700, off 12.5 percent from August last year, continued to be weighed down by distressed properties, which accounted for 31 percent of sales last month.
The inventory of existing homes for sale in August fell 10.8 percent to 3.62 million units from July, the NAR said. August’s sales pace left the supply of previously owned homes on the market at 8.5 months from 9.3 months’ worth in July.
“Supply is getting close to the level of 7.5 months that has historically been consistent with stable house prices,” said Paul Dales, U.S. economist at Capital Economics in Toronto.
“That said, home sales remain 30 percent below their peak and the fall back in August illustrates that the recovery is going to be gradual and patchy rather than quick and firm.”
Stubbornly high unemployment continues to cast a pall over the strength of the economic recovery, which many economists agree is already under way.
While fewer workers submitted applications for unemployment benefits last week, analysts said initial claims had to fall below 500,000 to signal a recovery in the labor market.
“The labor market is stabilizing. We’re not quite down to the level that would signal that the economy is creating more jobs than it is losing, but we could reach that point later this year or early next year,” said Gary Thayer, a strategist at Wells Fargo Advisors in St. Louis, Missouri.
The four-week moving average of new claims -- considered a better gauge of labor market trends -- dipped to 553,500, the lowest since late January, the Labor Department said.
The number of workers continuing to draw unemployment aid after an initial week of benefits fell 123,000 to 6.138 million in the week ending September 12.
Analysts said the steady decline in weekly jobless claims bodes well for September’s U.S. nonfarm payrolls report due on Friday, October 2.
For a graphic on existing home sales, click on: here
Additional reporting by Mark Felsenthal in Washington and Ellen Freilich in New York; Editing by Andrew Hay
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