The housing report due out August 23 is likely to show that housing prices rebounded for the third time within a four-month time frame. It’s a sign the recovery is still in process.
Slashed home prices, low interest rates, and a marginal ease in lending requirements are spurring the rebound; competition from foreclosures, unemployment of over 8%, and continued credit restrictions are providing stout headwinds.
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For these reasons, the Fed is keeping a close watch
on housing data. Analysts’ forecasts for the July housing number range from a sales rate of 340,000 to 400,000 from June’s decline to 350,000.
The Thursday weekly report of jobless claims on August 23 showed that claims for unemployment benefits rose for the second week in a row. This means improvement in the jobs market is still uneven. Claims rose by 4000 to a seasonally adjusted 372,000 for the week ended August 18.
The four-week moving average showed an increase of 3750 to 368,000. An earlier and separate Labor Department report showed the highest rate of job creation
for a single month since February. This raised hopes in the market that the employment picture was stabilizing.
Unemployment is another indicator the Fed seems to be watching closely as it determines whether to act and, if so, exactly what type of stimulus might be most effective for boosting the economy.