Sales of New Homes Slump 1.4% in August : Housing: The sixth decline in eight months is seen as more evidence of weakness in the industry.

Sales of new homes slumped 1.4% in August, the government reported today. It was the sixth decline in eight months and more evidence of weakness in the housing industry.

The Commerce Department said new-home sales totaled a seasonally adjusted annual rate of 550,000 after edging down a revised 0.2% in July. The July fall, however, was much softer than the 2.3% first reported last month.

Nevertheless, sales during the first eight months of the year have plunged 13.6% below the same period of 1989. Many analysts expect sales to remain weak because of high mortgage rates, consumer caution over adverse economic news and the Persian Gulf crisis and, in some areas, a glutted market.

Mortgage rates fell to 9.84% during the first week in August, but they began spiraling after the Aug. 2 Iraqi invasion of Kuwait and ended the month at 10.24%. They remained at 10.22% at the end of September.

The weak sales have contributed to sluggishness in the construction industry. The Commerce Department reported Monday that overall spending was unchanged in August while residential spending fell 1.2%.

Sales of less-expensive existing homes, on the other hand, have been moving up for three months, including a 2.1% advance in August, according to surveys by the National Assn. of Realtors.

The Commerce Department said the median price of a new home edged up 0.2%, to $120,200, in August. The realtors said the median price of an existing home was $97,000. The median means half of the homes cost more, half less.

The department also said inventories of new homes showed a 7.7-month backlog at the August sales pace, unchanged from July.

The West posted the only increase in sales--up 0.7%, to 139,000 units, after falling 3.5% a month earlier.