New-Home Sales Hit Record High

House for sale, home
CBS/The Early Show
Talk of a slowdown in the housing market may have been a little premature. One day after news that existing home sales slumped in July, word arises that new home sales soared last month.

The Commerce Department reports that sales of new single-family homes increased 6.5 percent to an annual rate of 1.4 million units — a record high.

Meanwhile, U.S. factories saw orders for costly manufactured goods drop by the largest amount in 18 months.

The mixed-message reports released Wednesday by the Commerce Department dramatized the vibrancy of the housing market and also the occasionally erratic pace of recovery from the 2001 recession in manufacturing.

Taken together, though, the reports still pointed to an economy that is moving ahead at a decent clip.

New-home sales in July soared to a seasonally adjusted annual rate of 1.41 million units. That represented a 6.5 percent increase from June's pace of 1.32 million units, which had been the previous record.

In the department's second report, new bookings to U.S. factories for "durable" goods — big-ticket items expected to last at least three years — declined by 4.9 percent in July from the previous month.

It marked the biggest drop since January 2004, when durable-goods orders fell by 5.7 percent.

On the housing front, the performance in July surprised economists who were predicting that sales of new homes would fall in July.

By region, sales rose in the West and Northeast, but fell in the Midwest and South.

The median price of a new home in July was $203,800, down from $212,400 one year ago. The median price is where half sell for more and half sell for less.

Federal Reserve Chairman Alan Greenspan has warned of "speculative fervor" in some local housing markets that may be pushing prices up to unsustainable levels.

But that shouldn't be a problem for the overall economy, James Gillespie of Coldwell Banker Real Estate told CBS Radio News.

The latest snapshot of housing activity, released by the National Association of Realtors on Tuesday, suggested that the sizzling housing market may be cooling a bit but nonetheless remains in healthy shape.