Data show deeper troubles in key job, housing sectors

Two cornerstones of the economy -- jobs and housing -- sank to new depths Thursday, with unemployment claims bolting higher and home prices recording one of their steepest drops on record.

The bleak reports underscored the self-reinforcing cycle hampering the economy: As home prices sink, foreclosures rise, banks feel pressure to shy away from lending and employers cut jobs.

The Labor Department said the number of new filings for jobless benefits rose to 406,000 last week, a jump of a seasonally adjusted 34,000. The last time jobless claims were higher was after the Gulf Coast hurricanes in 2005.

The housing news wasn’t any better: As sales of previously owned homes fell in June amid a glut of unsold and foreclosed homes on the market, the value of Americans’ biggest asset continued to sag.

The median price for a home sold in June was $215,100, down more than 6% from a year earlier and the fifth-largest year-over-year price drop on record, the National Assn. of Realtors said. Sales of previously owned homes fell 2.6% to an annual rate of 4.86 million.

With companies laying off workers and new jobs increasingly hard to find, the ranks of new home buyers could shrivel further. Consumer spending, the very lifeblood of the economy, is further in jeopardy.

“If you don’t have a job or are concerned about keeping your job, you are not going to rush out to buy anything -- let alone a home,” said Richard Yamarone, economist at Argus Research.

The Realtors group said inventories of homes on the market rose by 0.2% to 4.49 million units, meaning it would take 11.1 months to exhaust the current backlog at the June sales pace, the second-highest level in the last 24 years.

Sales of existing homes dropped in all regions of the country in June except the West, which posted a 1% sales increase.