New-Home Sales in U.S. Drop 4.3%

Sales of new homes dropped in July by the largest amount since February while the inventory of unsold homes climbed to a record high, the government reported Thursday, providing further evidence that the housing boom is ending.

In other economic news, orders to U.S. factories for big-ticket manufactured goods fell 2.4% in July as demand for aircraft and automobiles weakened.

And the Labor Department reported Thursday that the number of Americans filing claims for unemployment benefits last week slipped by 1,000 to 313,000.

New-home sales fell by 4.3% last month to a seasonally adjusted annual sales pace of 1.072 million units, the Commerce Department reported. The decline was the largest since an 11.5% plunge in February.

The July level of 1.072 million units sold was down 21.6% from a year earlier and below the 1.100 million that had been expected by analysts.

Analysts expect home sales to drop by about 10% this year.

Prospective home buyers have turned cautious about making such a big-ticket purchase as mortgage rates have gone up and uncertainty has risen over whether the economy and job creation will keep slowing, analysts said.

The government reported that the median price of a new home was $230,000 in July, down from $233,800 in June and up from $229,200 a year ago.

The data followed another report Wednesday that also provided evidence of how much the once-sizzling housing market has cooled.

Sales of previously owned homes dropped 4.1% in July from June to a 2 1/2 -year low, while the inventory of unsold homes climbed to a record high.

New orders for durable goods decreased by $5.3 billion last month, the Commerce Department said. The decline, which followed two straight monthly increases, was a poorer showing than the unchanged level that analysts had expected.

Much of the weakness came from a 9.6% drop in demand for transportation equipment, which included a 10% decline in new orders for commercial aircraft and parts, and a 7% fall in orders for motor vehicles and parts.

U.S. automakers continue to struggle with lagging sales in the face of rising gasoline prices, which have cut demand for previously popular models such as sport utility vehicles.

Analysts believe that output in the manufacturing sector will rise in coming months but at a slower pace than before, reflecting an economy that is slowing amid surging energy prices, rising interest rates and a cooling housing market.

For July, orders for durable goods -- items expected to last at least three years -- totaled $212 billion, a decline of $5.3 billion from the June level.

Excluding transportation equipment, orders were up 0.5% in July.