2018.05.2718:39:00UTC+00U.S. Home Sales Sharply Fell in April; Job Market Strengthens

U.S. homes sales slumped in April as an acute shortage of properties limited choices for potential buyers, the latest indication that the housing market was struggling to regain momentum.

Separate data recently showed a rise in the number of Americans filing for jobless benefits last week, the trend in claims continued to point to a tightening labor market. A strong labor market is fueling demand for housing.

The National Association of Realtors said existing home sales dropped 2.5 percent to a seasonally adjusted annual rate of 5.46 million units last month. The NAR attributed April's weak sales to an “utter lack of available listings on the market to meet the strong demand for buying a home.” April's drop followed two consecutive monthly growth.

Sales were down 1.4 percent on a year-on-year basis in April.

While the number of previously owned homes on the market rose 9.8 percent from the previous month to 1.80 million units in April, housing inventory fell 6.3 percent from the previous year. Supply has fallen for 35 consecutive months on a year-on-year basis.

Given labor market strength and rising inflation, economists said the sluggish housing market was unlikely to deter the Federal Reserve from hiking interest rates next month.

Minutes of the Fed's May 1-2 policy meeting published on Wednesday showed most officials believed “that if incoming information broadly confirmed their current economic outlook, it would likely soon be appropriate ... to take another step in removing policy accommodation.”

In a separate report, the Labor Department said initial claims for state unemployment benefits increased 11,000 to a seasonally adjusted 234,000 for the week ended May 19.

The labor market is viewed as being close to or at full employment, with the unemployment rate near a 17-½-year low of 3.9 percent. The jobless rate is near the Fed's forecast of 3.8 percent by the end of this year.