WASHINGTON — Worse-than-expected news on unemployment and home sales Thursday dampened optimism that a broad economic recovery was near.
Many analysts don't expect the housing slide to begin stabilizing until the second half of the year. They said layoffs may be at their high point, but that the jobless rate, already at a 25-year high, will keep rising until the middle of 2010.
The Labor Department reported Thursday that initial claims for unemployment compensation rose to a seasonally adjusted 640,000 last week, up from a revised 613,000 the previous week. That was slightly more than analysts' expectations of 635,000.
Meanwhile, the National Assn. of Realtors said sales of existing homes fell 3% in March to a seasonally adjusted annual rate of 4.57 million units, with February revised down to 4.71 million units. Sales had been expected to fall to an annual rate of 4.7 million units, according to Thomson Reuters.
The best reading of the new data is that the alarming free fall that began in late 2008 is coming to an end, analysts said
"The economic downturn remains intense, but it is no longer intensifying," said Mark Zandi, chief economist at Moody's Economy.com. "We are still falling, but we are no longer crashing."
In March, the jobless rate hit 8.5% nationally with businesses slashing a net total of 663,000 jobs. Unemployment in California climbed to 11.2% last month.
In another sign of labor market weakness, the number of people continuing to claim benefits rose to 6.13 million, setting a record for the 12th straight week. As a proportion of the workforce, the total jobless benefit rolls are the highest since January 1983.
The report from the Realtors association showed that the median sale price for an existing home in March plunged to $175,200, from $200,100 a year earlier.
With unemployment rising and the mortgage crisis far from over, foreclosures and distressed sales are dominating the market -- especially in California, Florida, Nevada and Arizona. The association estimates that about half of sales nationwide are from foreclosures or other distressed properties.
A top banking regulator tried to ease some concerns, saying banks and the housing sector had passed the worst part of their downturns.
"I think we're past the crisis stage. We're in the cleanup stage now," Sheila Bair, chairwoman of the Federal Deposit Insurance Corp., said at a conference.