New-Home Sales Post Another Strong Gain

New-home sales climbed more than anticipated in July, staging their fourth straight month of strong gains to add to evidence that the housing market is emerging from its long slump.

Separately, demand for long-lasting goods rebounded sharply in July, staging their biggest gain in two years on the back of big orders for planes and capital goods.

Sales of single-family homes increased by 9.6% to a seasonally adjusted annual rate of 433,000 compared to the prior month, the Commerce Department said Wednesday.

That was the highest number sold since September 2008 and well above projections for a 1.6% gain to 390,000 by economists surveyed by Dow Jones Newswires.

The increase was the fifth in seven months, as buyers are returning to the market in search of bargains.

The market for new homes appears to have bottomed in January, when sales hit 329,000Home construction unexpectedly fell 1% in July, however, according to data released earlier in the month.

June new-home sales were revised up to an annual rate of 395,000, a 9.1% increase, Wednesday's data showed. Originally, the government had reported an 11% jump in June sales to 384,000, though May sales were also revised up to 362,000 from 346,000.

Year over year, July new-home sales were still down 13.4%, however.

The market for new homes is expected to continue to lag sales of used homes, where foreclosures have dragged down prices.

The median price for a new home was $210,100 in July, down 11.5% from $237,300 the same month a year ago. On a monthly basis, the price edged down 0.1% from $210,400 in June.

Oversupply has been is one factor keeping prices down, though there was significant improvement in that area, as well. The ratio of houses for sale to houses sold in July was 7.5, the lowest level since April 2007 and down from 8.5 the month before. At the end of July, there were an estimated 271,000 homes for sale, the smallest number since March 1993. That compares with 280,000 in June.

Regionally last month, new-home sales jumped 32.4% in the Northeast and 16.2% in the South, with sales up 1% in the West. Sales were down 7.6% in the Midwest.

An estimated 39,000 homes were actually sold in July, up from 36,000 in June, based on figures not seasonally adjusted.

Biggest Durables Gain in Two Years
Manufacturers' orders for durable goods jumped 4.9% last month to a seasonally adjusted $168.43 billion, the Commerce Department said Wednesday. That was the largest increase since 5.4% in July 2007.

Economists surveyed by Dow Jones Newswires had projected a 3% gain in July orders.

Overall durable goods orders for June were revised up, estimated to have declined 1.3% instead of the 2.2% drop previously reported.

Transportation-related durables climbed 18.4% in July, the biggest gain since September 2006. Orders for commercial planes soared 107.2%, following a 30% drop the previous month.

Motor-vehicle orders increased 0.9%, with General Motors Co. joining Chrysler to emerge out of bankruptcy and both firms getting a boost from the "Cash for Clunkers" program.

Excluding the transportation sector, orders for all other durables climbed 0.8%. Demand ex-transportation had gained 2.5% in June. Orders for all durables except defense goods increased by 4.3% in July, also a two-year high, after rising 0.7% in June.

Orders for nondefense capital goods excluding aircraft -- a key barometer for capital spending by U.S. businesses -- fell 0.3%. That follows a 3.6% gain in June.

Overall capital goods orders rose 9.5% in July. Nondefense capital goods -- items meant to last 10 years or longer -- gained by 8.6%. Defense-related capital goods orders went up by 14.8%.

Durable goods are products designed to last at least three years, such as cars, planes and computers. While the monthly figures tend to be volatile, such big ticket items provide an indication about the health of U.S. manufacturing and domestic demand.

Data out earlier this month showed a 0.5% pickup in U.S. industrial production in July, for the first monthly gain since October 2008 and only the second since the recession began in December 2007.

On Thursday, second-quarter gross domestic product is expected to be revised down to a 1.5% contraction, instead of the 1% decline in the preliminary estimate. That's due in part to expectations that businesses liquidated more inventory than initially thought. Still, most economists believe that the recession is at or near its end.

Wednesday's report showed that manufacturers are still reducing inventory, however, with inventories of durable goods registering their seventh straight month of declines at 0.8% in July.

Unfilled manufacturers' orders for durables, a sign of future demand, decreased 0.1% for the tenth consecutive decline.