A rush of consumers aiming to meet a deadline to qualify for a federal tax credit pushed the number of buyers signing contracts to purchase homes in April to the highest level since October. But a weak job market may undermine future growth in home sales. A new report says job cuts continued last month, though they were sharply lower than a year ago.
The National Association of Realtors says its seasonally adjusted index of sales agreements for previously occupied homes rose 6 percent in April from a month earlier to a reading of 110.9. March's reading was revised upward to 104.6.
Economists surveyed by Thomson Reuters had expected the index would rise to 108. The index also was up 22 percent from the same month a year earlier.
Lawrence Yun, NAR chief economist, said that "evidently the tax stimulus, combined with improved consumer confidence and low mortgage interest rates, are contributing to surging sales.
"The housing market has to get back on its own feet and now appears to be in a good position to return to sustainable levels even without government stimulus, provided the economy continues to add jobs," he said.
The index provides an early measurement of sales activity because there is usually a one- to two- month lag between a sales contract and a completed deal.
More Jobs Cut
A separate report Wednesday showed that the number of planned layoffs at U.S. companies totaled 38,810 last month, up 1.3 percent from April, according to Challenger, Gray & Christmas Inc., a global outplacement consulting firm.
But May's layoffs were 65 percent lower than a year earlier. It marked the 12th consecutive month in which job cuts were below the comparable year-ago figure.
"Announced job cuts have, for all intents and purposes, returned to prerecession levels," John A. Challenger, chief executive officer of Challenger, Gray & Christmas, said in a statement. "What makes the low job-cut totals we have seen this spring particularly remarkable is that we still have not reached what is the slowest downsizing period of the year, which typically occurs during the summer months."
The report comes ahead of Friday's May employment data from the Labor Department. Private economists estimate the unemployment rate dipped to 9.8 percent in May as employers added 513,000 jobs. In April, the jobless rate edged up to 9.9 percent and nonfarm payrolls grew by 290,000.
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