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Spokane, Washington  Est. May 19, 1883

US existing-home sales decline as rates keep buyers sidelined

A “For Sale” sign in front of a house in Westchester County in Rye, N.Y., on July 5, 2021.  (Stephanie Keith/Bloomberg)
By Michael Sasso

U.S. existing home sales decline as rates keep buyers sidelined

Contract closings decreased 4.3% from a month earlier to a 4.19 million annualized rate, according to National Association of Realtors data released Thursday. The pace was in line with the median estimate of economists surveyed by Bloomberg.

“Though rebounding from cyclical lows, home sales are stuck because interest rates have not made any major moves,” NAR Chief Economist Lawrence Yun said in a statement.

Mortgage rates have moved back above 7%, hindering recent momentum in the housing market. Purchases of new houses have also cooled as prospective buyers move to the sidelines until financing costs ease.

Other housing data this week showed builder optimism leveled off and construction starts decreased. Mortgage rates remain more than twice as high as at the end of 2021, and Federal Reserve Chair Jerome Powell on Tuesday said the Fed is prepared to keep rates higher for longer than previously expected in order to reduce inflation.

U.S. jobless claims hold steady in sign of resilient labor market

Initial applications for U.S. unemployment benefits remained subdued last week, consistent with a healthy job market.

Initial claims held at 212,000 in the week ended Saturday, according to Labor Department data released on Thursday. The median forecast in a Bloomberg survey of economists called for 215,000.

Continuing claims, a proxy for the number of people receiving unemployment benefits, were also little changed at 1.81 million in the week ended April 6.

The job market has remained surprisingly resilient despite elevated interest rates. Federal Reserve Chair Jerome Powell signaled Tuesday that the continued strength in the labor market and lack of progress on inflation could lead policymakers to keep interest rates elevated for longer.

The four-week moving average for initial claims, which helps smooth short-term fluctuations, has remained at 214,500 for the last three weeks.

Discover Financial profit dives 68% over 3 months

Discover Financial Services, the lender that agreed to be acquired by Capital One Financial Corp. in the year’s biggest announced deal, posted a sharp drop in first-quarter profit as it worked to address compliance and risk-management deficiencies.

Net income plunged 68% to $308 million, or $1.10 a share, for the three months through March, Riverwoods, Illinois-based Discover said Wednesday in a statement. That missed the $2.96 average estimate of analysts in a Bloomberg survey.

Capital OneChief Executive Officer Richard Fairbank predicted in February, shortly after announcing the $35 billion deal to create the largest U.S. credit-card issuer by loan volume, that the time and expense needed to fix Discover’s regulatory challenges would be high. The acquisition, subject to antitrust reviews and shareholder approvals, is expected to be completed late this year or in early 2025.

Discover’s first-quarter operating expenses surged 67% to $2.31 billion

In another sign of increased stress for U.S. consumers, the firm reported that credit-card loans at least 30 days overdue climbed to $3.81 billion, up 54% from a year earlier, while those at least 90 days delinquent rose 61%. Earlier this month, the Federal Reserve Bank of Philadelphia said in a report that card delinquency rates in the fourth quarter were the highest since at least 2012.

From wire reports