economy

The U.S. economy is displaying mixed signals. Contracts to buy previously owned U.S. homes fell for the third straight month, but fewer Americans filed new claims for jobless benefits last week.

Jason Lange, Reuters
Posted: 09/26/13, 8:03 PM PDT | Updated: 3 hrs ago

Contracts to buy previously owned U.S. homes fell for the third straight month in August but fewer Americans filed new claims for jobless benefits last week, giving conflicting signals on the health of the economy.

Another economic report on Thursday showed a worrisome decline in consumer prices during the second quarter.

Together, the data offers a challenge for the Federal Reserve, which wants to see more evidence that the U.S. economy is gaining momentum before it scales back a bond-buying stimulus program.

The Fed last week flagged a rise in interest rates as a threat to the economy, and also said that employment and inflation remain too weak.

The National Association of Realtors said its Pending Homes Sales Index, based on contracts signed last month, decreased 1.6 percent last month.

The decline, which was steeper than economists had expected, was the latest sign that a sharp rise in mortgage rates have put a significant dent in the U.S. housing market recovery.

“The housing market is not rolling over, but it does seem to be losing steam,” said Ian Shepherdson, an economist at Pantheon Macroeconomics in White Plains, New York.

Mortgage rates have shot up since May and pushed potential home buyers out of the market, which is still smarting from the 2007-09 recession. Contracts fell across most of the country in August, with gains only in the Northeast.

At the same time, labor market data was more positive.

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