- The Washington Times - Wednesday, August 24, 2005

ASSOCIATED PRESS

Sales of new homes shot up to a record high in July, while U.S. factories saw orders for costly manufactured goods drop by the largest amount in 18 months.

The mixed-message reports released yesterday 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.

Some economists thought part of July’s decline might reflect businesses turning a bit cautious in their buying, given a toll of high energy prices that can increase their costs and squeeze their bottom lines.

The drop in orders “suggests that escalating oil prices … might be creating skittishness on the part of business decision makers,” said Clifford Waldman, economist at the Manufacturers Alliance/MAPI, a research group. On the other hand, he said, July’s decline comes after nice increases in the prior three months.

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 a year ago. The median price indicates half sell for more and half sell for less.

Existing-home sales dipped in July but still were at the third-highest level on record, a report released Tuesday showed.

While the booming housing market has been a consistent star performer for the economy in recent years, the manufacturing sector has sometimes had a bumpy ride.

The last time durable-goods orders fell was in March. Since then, manufacturers have been seeing bookings go up. In June, orders went up by 1.9 percent.

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