Sales of new homes in the US rose unexpected last month while factory orders also rose, raising hopes that the economy can safely weather financial turmoil that has shaken Wall Street.
The US Commerce Department reported this afternoon that new-home sales rose 2.8 per cent in July, after falling 4 per cent in June.
The increase in July lifted sales to a seasonally adjusted annual rate of 870,000 units. A second report showed that orders to factories for big-ticket goods jumped 5.9 per cent in July, the most in 10 months.
Both reports were better than analysts expected. They were forecasting home sales to fall and were calling for a much smaller, 1 per cent gain in factory orders.
In the housing report, the improvement in sales reflected gains in the West and the South, where sales went up by 22.4 per cent and 0.6 per cent respectively. Sales, however, tumbled 24.3 per cent in the Northeast and were down 0.9 per cent in the Midwest.
Even with the overall increase in home sales for July, sales are down a deep 10.2 per cent from a year ago, underscoring the toll of the housing slump.
The median price of a new home, meanwhile, was $239,500 in July, up from $238,100 in July a year ago. The median price means half sell for more and half sell for less. The average home price, however, dropped to $300,800 in July, down from $311,300 for the same month last year.
Today's reports offered a spot of relief amid recent turbulence on Wall Street, which has darkened investors' feelings about the nation's financial prospects.
Fears that the worsening housing slump and credit crunch could hurt the economy have gripped Wall Street investors in recent weeks, causing stocks to swing wildly.