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Employment, Housing Limp Along Together

NEW YORK TheStreet) -- Home sales were down in 30 of the top 42 U.S. counties in November, and December's numbers may be no better.

A research note released Thursday from DataQuick, a real estate industry analysis company, shows that lackluster employment continues to be a problem for homebuyers and real estate agents. With a surprising rise in jobless claims this week (to 379,000), this could mean a sustained decline in housing sales well into the new year.

"This month's jobs report was better than recent history, but is still far below where it needs to be to truly benefit the housing landscape," says Gordon Crawford, vice president of analytics for DataQuick. "With U.S. population growth at roughly 0.9%, or 2.8 million people per year, employment needs to grow by more than 235,000 a month to keep up with population growth. Last month, jobs only increased by 203,000."

Meanwhile, DataQuick says national home sales over the past eight months have been "near zero or decreasing" in half of the residential real estate market, and that's not all about the jobless numbers -- rising home values are also keeping homebuyers away from "for sale" signs.

Even in markets where sales are higher, home prices are rising above the long-term average, DataQuick reports.

"Along with reduced sales numbers contributing to home price appreciation, additional explanations exist for the rapid increase in home prices across the market," Crawford says. "One explanation is that home prices have been correcting from an excessive downturn below fundamental values that occurred during the great recession and that have continued as housing market participants search for a floor in home prices."

Inflated home values may be leading to bigger trouble down the road for the real estate market, Crawford says.

"An even more likely explanation is that some of the excessive, above-trend, home price growth is speculative and characteristic of the formation of a new home price bubble," he adds.

There is some good news in the DataQuick numbers: Foreclosures are down. Of 42 counties reporting figures, 29 have seen a decline that takes so-called toxic homes off the market.

But as long as the job picture remains murky, and as speculators creep into the housing market, don't expect a big rise in residential property sales in the first few months of 2014.