Local home sales buck U.S. trend

Published 9:00 pm Thursday, May 24, 2001

Herald staff and

ASSOCIATED PRESS

Americans bought fewer new homes in April as worries about job security helped push sales down by the largest amount in four years.

Directly comparable figures for Snohomish County don’t exist, a real estate expert said. But data on building permits for the first three months of the year suggest a slight growth in demand for new single-family homes here.

Sales of new single-family homes fell by 9.5 percent to a seasonally adjusted annual rate of 894,000, the biggest drop since April 1997, the Commerce Department reported Thursday.

Snohomish County issued 2.2 percent more building permits for single-family homes during the first-quarter of this year, said Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University. "It seems to be going pretty well."

But overall residential construction in the state was down 23 percent for the quarter. That reflects a drop in permits for apartments, Crellin said.

In another government report, the number of Americans filing new claims for state unemployment insurance last week rose sharply, fresh evidence that the weakening economy is making it harder for workers to hold onto their jobs.

The Labor Department said new claims for jobless benefits jumped by a bigger-than-expected 15,000 to a seasonally adjusted 407,000 for the workweek ending May 19.

In April, the nation’s unemployment rate jumped to 4.5 percent, a 0.2 percentage-point increase from March, and businesses slashed payrolls by the largest amount since the last recession a decade ago.

In Washington, the number of new claims fell by 4.7 percent from the previous week, according to the state’s Employment Security Department. For the month of April, the jobless rate was 4.5 percent compared with 4.7 percent in March, reflecting a normal seasonal decline, said Donna Thompson, a labor market analyst with the department.

But compared to this time last year, 1,600 more people had filed for jobless benefits in the state, an increase of 36 percent.

It’s not hard to figure out why, Thompson said. "Aluminum plants are down, HomeBase is closing, Amazon.com laid off 500 people, AT&ampT Broadband has been laying off — that’s what you’re looking at," she said.

Snohomish County companies by and large have been insulated from the job losses, Thompson said. But the county has been affected by layoffs in Seattle and the Eastside, "because we’ve got so many people who work in King County," she said.

Economists linked the decline in new-home sales to the worsening labor market and last month’s big drop in consumer confidence, which underscored increasing fears among Americans about their jobs and the economy.

"If you don’t have a job or you are very insecure about the one you have, that is the biggest factor in determining whether an expensive purchase, like a new home, is going to be made," said Richard Yamarone, an economist with Argus Research Corp. Still, even with last month’s drop, new-homes sales are still at healthy levels, economists said.

The annualized level of 894,000 posted in April "is still above the average level of the past three years," said David Seiders, chief economist at the National Association of Home Builders. He said that new-home sales averaged 885,000 in 1998, 880,000 in 1999 and 877,000 in 2000. "So the level of activity is still good."

Economists were predicting a decline in new-home sales last month, since the slowing economy is reducing demand for workers.

While the economic slowdown has forced companies to cut production and jobs because of slumping demand, housing and construction have generally held up well because of low mortgage rates.

But "slowing job and income growth is offsetting lower rates," said Merrill Lynch economist Karen Dexter.

Thursday’s figures reflect a change in the way the government calculates new-home sales. The change resulted in the level of monthly sales being revised downward. The new method no longer takes into account new homes under construction before permits were issued.