Home Sales, Jobs Data Further Bolster Economic Outlook

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Sales Of Existing Homes In U.S. Rise To 10-Month High
Mike Kane/Bloomberg via Getty Images
By Lucia Mutikani

WASHINGTON -- U.S. home resales rose to a 10-month high in July and the number of Americans filing new claims for unemployment benefits fell last week, signaling strength in the economy early in the third quarter.

The growth outlook was further buoyed by other reports Thursday showing factory activity in the mid-Atlantic region hit its highest level since March 2011 in August while a gauge of future economic activity increased solidly last month.

The National Association of Realtors said existing home sales increased 2.4 percent to an annual rate of 5.15 million units. That was the highest reading since last September and confounded economists' expectations for a pullback.

%VIRTUAL-pullquote-It goes some way in allaying fears about a relapse in the housing sector recovery, which until recently appears to have stagnated.%Home resales have now increased for four straight months after the housing market recovery stalled in the second half of 2013 following a run-up in mortgage rates.

"It goes some way in allaying fears about a relapse in the housing sector recovery, which until recently appears to have stagnated," said Millan Mulraine, deputy chief economist at TD Securities in New York.

In a separate report, the Labor Department said initial claims for state unemployment benefits fell 14,000 to a seasonally adjusted 298,000 for the week ended Aug. 16. That pointed to a sustained improvement in labor market conditions.

The four-week average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, rose 4,750 to 300,750. But at that level it is consistent with solid job growth and claims are back to pre-recession levels.

U.S. stocks were trading higher, with the S&P 500 index hitting an intraday record. The housing index was up 0.27 percent, with PulteGroup (PHM) gaining 0.26 percent.

The dollar was little changed against a basket of currencies while prices for U.S. Treasury debt rose marginally.

Firming Labor Market

The jobless claims report covered the period during which the government surveyed employers for August's nonfarm payrolls data. The four-week average of claims fell 8,500 between the July and August survey periods, suggesting another month of relatively strong job gains.

Nonfarm payrolls increased by 209,000 in July, marking the sixth consecutive month that job growth topped 200,000, a sign of strength last seen in 1997. The firming jobs picture appears to have caught policymakers by surprise.

Minutes of the Federal Reserve's July 29-30 policy meeting published Wednesday showed officials viewing the improvement in labor market conditions as "greater than anticipated" and hinted that that could lead to an early interest rate increase.

The U.S. central bank had previously termed labor market slack "significant" but the minutes showed many policymakers thought this characterization "might have to change before long."

The Fed has held its benchmark interest rate near zero since December 2008. The economy grew at a 4 percent annual rate in the second quarter. Growth estimates for the third quarter are currently around a 3 percent pace.

In a third report, financial data firm Markit said its preliminary, or "flash," U.S. Manufacturing Purchasing Managers Index rose to 58 this month, the highest since April 2010, from 55.8 in July.

That show of strength was corroborated by a separate report from the Philadelphia Federal Reserve Bank, which showed its business activity index increased to 28 this month, the highest since March 2011, from 23.9 in July. Any reading above zero indicates expansion in the region's manufacturing.

"Overall, today's Philly Fed and Markit manufacturing surveys indicate continued healthy growth in the manufacturing sector in August," said Dean Maki, chief U.S. economist at Barclays in New York.

A fifth report from the Conference Board showed its Leading Economic Index increased 0.9 percent last month after advancing 0.6 percent in June.

-Additional reporting by Jason Lange in Washington and Gertrude Chavez-Dreyfuss in New York.

15 PHOTOS
House Rich: Neighborhoods With the Biggest Price Jumps
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Home Sales, Jobs Data Further Bolster Economic Outlook

Year-over-year gain: 21.5%

Median sale price, Jan. 2013: $224,450

Median sale price, Jan. 2014: $272,750

Residents enjoy hundreds of nearby hiking trails, as well as indoor culture at the Fine Arts Center and the Colorado Springs Philharmonic.

Year-over-year gain: 22%

Median sale price, Jan. 2013: $318,375

Median sale price, Jan. 2014: $388,500

This neighborhood, bounded by the Schuylkill River and 20th Street, and by South Street and Christian Street, was viewed as a slum in the 1970s, when Philadelphia's Redevelopment Authority took over abandoned properties.

Year-over-year gain: 24.2%

Median sale price, Jan. 2013: $516,450

Median sale price, Jan. 2014: $641,500

Magnolia covers 4 square miles, making it the second-largest Seattle neighborhood by area. It features a lighthouse built in 1881 and is home to Seattle's largest park, at 534 acres.

Year-over-year gain: 32.1%

Median sale price, Jan. 2013: $210,446

Median sale price, Jan. 2014: $277,898

Paradise Valley, in the heart of the Scottsdale-Phoenix area, gets an average 294 days of sunshine a year -- hence, the more than 200 golf courses.

Year-over-year gain: 32.2%

Median sale price, Jan. 2013: $344,750

Median sale price, Jan. 2014: $455,835

The Washington Post listed Sunset Hills among "the shortest commute" category of Virginia neighborhoods, with an average commute time of just over 21 minutes. And Dulles International Airport is about six miles away.

Year-over-year gain: 44.5%

Median sale price, Jan. 2013: $247,735

Median sale price, Jan. 2014: $357,900

This once-seedy area has become hot in recent years. It's packed with art galleries and chic retail shops, as well as new upscale bars and restaurants next to venerable family-owned cafeterias.

Year-over-year gain: 46.9%

Median sale price, Jan. 2013: $284,750

Median sale price, Jan. 2014: $418,250

Brighton, once the center of New England's cattle trade, is in the northwest corner of Boston, on the Charles River. The Brighton Branch Library is Boston's first renovated LEED Green Building. The Brighton Police station is shown here.

Year-over-year gain: 47.5%

Median sale price, Jan. 2013: $223,175

Median sale price, Jan. 2014: $329,100

South Loop joins a number of other once-blighted neighborhoods on this list that have been redeveloped and are now hot. The site of former rail yards, it was known for many years more for its vices (as in brothels, burlesques) than its residential virtues.

Year-over-year gain: 48.7%

Median sale price, Jan. 2013: $241,000

Median sale price, Jan. 2014: $358,450

Also: Fairgrounds, San Jose (41.4%); La Jolla, San Diego (40%); Woodland Hills, Los Angeles (37.5%); Southwest Anaheim, Anaheim (35.2%); Berryessa, San Jose (34.4%).

Newhall, the southernmost and oldest district of Santa Clarita, was the first permanent Anglo settlement in the valley. Ranches-turned-film studios dot the area, including the Melody Ranch, which was once owned by Gene Autry. The ranch hosts the annual Santa Clarita Cowboy Festival.

Year-over-year gain: 48.8%

Median sale price, Jan. 2013: $504,250

Median sale price, Jan. 2014: $750,275

This is the most affluent neighborhood in Charlotte; the median income is $79,737, according to Zillow. That compares with a median of $46,975 for Charlotte. A high point of the area is the Duke Mansion, built in 1915 by tobacco magnate James Buchanan Duke.

Year-over-year gain: 57.4%

Median sale price, Jan. 2013: $167,450

Median sale price, Jan. 2014: $263,615

People who live here, according to classifications Zillow uses to characterize residents, are likely to be: Corporate Climbers, Multi-lingual Urbanites or in a category called "Bright Lights, Big City," which Zillow uses to describe "singles ranging in age from the early 20s to mid-40s who have moved to an urban setting."

Year-over-year gain: 97.3%

Median sale price, Jan. 2013: $668,250

Median sale price, Jan. 2014: $1,318,301

New York City’s 92-acre planned community includes areas built on more than 3 million cubic yards of soil and rock, some of which was excavated during the construction of the World Trade Center.

Bloomberg ranked neighborhoods in U.S. cities based on the year-over-year increase in median home sale prices from January 2013 to January 2014. Percentage increases were based on Zillow calculations of median sale prices of all home types and calculated only for neighborhoods with at least 10 sales per month. Only neighborhoods with median home sale prices of at least $250,000 in January 2014 were included. Data were rounded.

Related real estate rankings:

Most Expensive Home Prices: U.S. Neighborhoods

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