WASHINGTON (Reuters) –
Sales of new U.S. single-family homes rose slightly in April, while fewer workers filed for first-time jobless aid last week, raising hopes the worst of the deep economic recession was likely over.
The Commerce Department said on Thursday that new home sales climbed 0.3 percent in April from March to a 352,000 annual unit pace, while prices rose 3.7 percent, the biggest monthly advance since November.
While the sales pace was not as brisk as financial markets had anticipated, analysts were encouraged by a drop in the stock of homes available for sale, which reached the lowest level in nearly eight years.
A separate report from the Labor Department showed initial claims for state unemployment insurance benefits dropped by 13,000 to 623,000 in the week ended May 23, a second straight weekly drop.
The reports were the latest in a series suggesting the intensity of the 17-month old downturn, characterized by severe job losses and plunging asset prices, was losing momentum and the economy could return to growth later this year.
"The data are consistent with the notion that the worst of the recession is behind us. We haven't hit bottom yet, but seem to be nearing it. ... I see positive growth in the fourth quarter," said Mark Vitner, a senior economist at Wachovia Securities in Charlotte, North Carolina.
U.S. stocks indexes ended up more than 1 percent, buoyed by energy shares as oil prices rose and results of a Treasury note auction calmed fears over demand for government debt.
Longer-dated U.S. Treasury debt prices also rose following the seven-year note sale, with yields retreating from six-month highs scaled on Wednesday.
The inventory of homes available for sale in April fell 4.2 percent from the prior month to 297,000, the lowest level since May 2001. At April's sales pace, that represents a 10.1 months' supply, the smallest backlog in nine months.
Sales, however, were down 34 percent compared to April last year, a reminder of how steeply the market had been falling. The sales pace appears to have bottomed in January when it hit a record low 329,000 unit pace.
"Together they draw a picture that tells us that the housing market is finally bottoming out and that conditions are beginning to improve," said Bernard Baumohl, chief global economist at The Economic Outlook Group in Princeton.
While the housing market may finally be finding its feet, one out of eight U.S. households with a mortgage ended the first quarter late on loan payments or in the foreclosure process, the Mortgage Bankers Association said on Thursday.
That is largely attributable to rising unemployment. While the pace of layoffs has eased and initial claims appear to have peaked, people who have lost their jobs are finding it difficult to re-enter the labor market.
The Labor Department said the number of people still on unemployment benefit rolls after an initial week of aid rose 110,000 to a record 6.79 million in the week ended May 16, and analysts expect a report on June 5 will show the jobless rate shooting to 9.2 percent in May from 8.9 percent in April.
A second report from the Commerce Department on Thursday also offered some hope for the economy.
The department said new orders for long-lasting U.S. manufactured goods rose 1.9 percent in April from March, the biggest gain in 16 months. But the report was tempered by a sharp downward revision to March orders, which fell 2.1 percent.
In addition, a closely watched gauge of business spending plans fell 1.5 percent after slipping 1.4 percent in March, an indication that manufacturers were still working to reduce their stock of unsold goods choking their warehouses.
(Additional reporting by Glenn Somerville in Washington and Lynn Adler in New York; Editing by Chizu Nomiyama)