Housing cannot improve without better jobs data
Jobless claims drop, but not enough to influence real estate
While fewer Americans filed for unemployment last week, the slight dip is not enough to spur housing or economic growth, analysts say. In fact, it may be a while until the market has that kind of momentum again.
Initial jobless claims dropped by 2,000 filings to 339,000 applications for the week ending Nov. 9, compared to the previous week's revised figure of 341,000 claims, the Department of Labor noted.
Additionally, the 4-week moving average hit 344,000 filings, a decline of 5,750 applications from the previous week's revised average of 349,750.
We are in a period of waiting. Two months with small pockets of strength is not enough to show sustainability, said Lindsey Piegza, managing director and chief economist with Sterne Agee.
As consumers get scared, they pull back on large ticket items, like housing, she explained. As the unemployment rate goes down, they are more likely to spend on large ticket items, Piegza added. But that's not happening yet, and real estate is one of the markets losing out on potential borrowers.
Meanwhile, Fannie Mae Chief Economist Doug Duncan said businesses are just not hiring at a pace that mirrors activity levels from other post-recessionary periods. The job numbers are not far from where people would expect them to be in a standard recovery, he explained.
"We’re growing at 2% on an annualized basis, so we are growing and have exceeded the average length of expansion since WWII, which on average is 4 years 6 months," he added.
"The bottom line is that while layoffs have been declining for some time, hiring has been very muted. If you look at the path of job production from the end of the recession forward, this is by far the weakest recovery we have seen," Duncan said.