July new home sales rise to record

The economies "stealth boom" continues.

WASHINGTON (Reuters) - Sales of new U.S. homes jumped 6.5 percent to a record high in July, defying economists' expectations for a decline, as purchases soared in the Northeast and West and median prices dropped, a government report showed on Wednesday.

The Commerce Department said new single-family home sales rose to a seasonally adjusted annual rate of 1.410 million units from a downwardly revised 1.324 million unit rate in June. The July sales pace was 27.7 percent higher than a year earlier.

Economists had expected new home sales to drop to a 1.333 million unit pace from June's originally reported 1.374 million unit pace.

While sales climbed, so did supply. The inventory of homes available for sale at the end of July stood at a record 460,000, up 1.8 percent from June and 15 percent higher than a year ago, the report showed. At the current sales pace, the supply of homes represented 4 months' worth in July.

The housing sector has been on a tear for more than four years, with home sales and construction striking regular records on the back of stubbornly low mortgage rates that drove demand. While economists now expect 2005 to be another record year, the sector began to show some signs of softness last month, as resales of previously owned homes dropped 2.6 percent and supply started to climb.

How dare low mortgage rates be so stubborn.