Sales of New Homes Decline in June

A house in Chappaqua, N.Y. has a "For Sale by Owner" sign Friday, July 21, 2006. Sales of existing homes fell in June for the eighth time in the past 10 months while home prices edged up at the slowest pace in more than a decade, more signs that the housing market has slowed dramatically. (AP Photo/Mark Lennihan) (Mark Lennihan - AP)

_Orders to factories for big-ticket durable goods jumped by a stronger-than-expected 3.1 percent in June, helped by a rebound in demand for commercial aircraft. Analysts said business investment would help bolster manufacturing production in coming months as demand by consumers slows. President Bush noted the figure in a speech to the National Association of Manufacturers. "The manufacturing sector is expanding," he said. "The economic policies we have pursued are working."

_The number of people filing claims for unemployment benefits last week fell by 7,000 to 298,000, indicating continued strength in the labor market even though job growth has slowed in recent months.

On Wall Street, the Dow Jones industrial average dipped slightly, falling 2.08 points to close at 11,100.43 as investors expressed concerns about Friday's release of the government's first estimate for growth in the April-June quarter. That report is expected to show the economy slowing sharply.

The 3 percent decline in home sales, which followed a small 0.5 percent increase in May, left the number of unsold homes at a record 566,000.

At the June sales pace, it would take 6.1 months to sell the backlog of homes, up sharply from the 4.3-month supply of unsold homes a year ago when the housing market was booming.

Economists are looking for new home sales to slow further as mortgage rates keep rising.

"Our view remains that sales will continue to slow over the course of this year and into next," said Patrick Newport, an economist with Global Insight. "A soft-landing continues to be the most likely scenario."

The big worry is that home sales will fall so sharply that it could send shock waves through the economy, much as the bursting of the stock market bubble in 2000 contributed to the recession the next year.

But so far, economists said the decline in housing is contributing to an economic slowdown, but they are not forecasting a recession.

In June, sales were weak in every section of the country except the West, which posted an 8.2 percent increase after a decline of 7.3 percent in May. Sales fell 11.3 percent in the Northeast and were down 7.9 percent in the Midwest and 6 percent in the South.

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On the Net:

Home sales: http://www.census.gov/newhomesales

Durable goods: http://www.census.gov/m3

Jobless claims: http://www.ows.doleta.gov/