New-Home Sales Fall 7.1% in Nov.

U.S. consumers bought new homes in November at a slower-than-expected pace, and the number of Americans filing jobless claims rose, the government said Thursday, offering signs the economy may have begun to slow.

The number of new single-family homes sold in November fell by 7.1% to a seasonally adjusted annual pace of 865,000 units, from a 931,000-unit pace in October, the Commerce Department said. The October rate was revised down sharply from a previously reported pace of 986,000 units.

The November decline was the largest since an 8% fall in December 1997. Economists polled by Reuters had expected a stronger sales pace in November of 926,000 units.

The housing data reinforced the notion that after a record boom year for real estate in 1999 the sector may be a drag on the economy this year. But rising home prices raised concerns of potential inflation in the world’s richest economy.

“While a home sales rate of 865,000 is still very strong on a historical basis, it is off over 12% from November 1998,” said economic consultant Joel Naroff of Philadelphia. “That tells us that residential investment should be a drag on the economy during this year.”

Despite the slackening home sales pace, there was one worrisome aspect to the report: rising prices. The median home price rose to a record $167,400 in November, from $159,000 in October, while the mean home price rose to a record $209,700 from $201,300 in October, an indication that Americans were still buying luxury homes.

Naroff said those higher prices were a “clear warning that inflationary pressures are building in the economy” and were a potential worry for the Fed.

The Labor Department reported the number of newly unemployed Americans filing for state benefits jumped by 33,000 last week, the largest one-week rise in a year.

Initial jobless claims, which give an early reading on the strength of the labor market, rose to 309,000 in the holiday-shortened week ended Jan. 1.

That was much steeper than the 280,000 expected by Wall Street analysts. But although the data seemed to indicate some easing of labor market pressures, James Annable, chief economist at WingSpanBank.com, suggested they should be “taken with a grain of salt” because of fluctuations in employment during the Christmas retailing season.