Insurance claims by the jobless continue to decline, a sign of the continuing good health of the labor market. Claims for unemployment insurance filed in the week of December 13 totaled 298,000, a decrease of 6,000 from the previous week. This puts the 4-week moving average to 298,750, which is below the 300,000 benchmark that signals a healthy economy. A healthy job market is important to keep the housing market recovery going.
The latest data at the state level is of the week ending December 6. The largest decreases were in Nebraska (-429), Vermont (-353), Arkansas (-216), Kentucky (-134), and North Dakota (-13).The largest increases in initial claims for the week ending December 6 were in Pennsylvania (+12,302), Texas (+9,107), Georgia (+8,214), California (+6,051), and New York (+5,972). States reported increases/decreases in a variety of sectors that included manufacturing, construction, and services.
In a related report, the Federal Operations Market Committee which sets monetary policy decided yesterday to keep steady the federal funds rate which underpins the movement of mortgage rates. Interest rates have fallen sharply, with the conventional 30-year mortgage rate averaging 3.8 percent for the week ending Dec 18. There is less pressure for inflation to increase given the steep drop in oil prices.
Given the favorable economic environment of low interest rates and solid job growth (240,000 jobs created per month in 2014), NAR forecasts 4.9 million of existing home sales in 2014, increasing to 5.2 million in 2015.