BUT WAIT......... JULY SALES UP!!!!!!!!!!!!
Positive July sales ease bite of credit
WASHINGTON - Sales of new homes turned up and factory orders soared in July, suggesting the economy was on stable footing before a credit crunch took a turn for the worse.
The Commerce Department reported Friday that sales of new homes rose 2.8 percent to a seasonally adjusted annual rate of 870,000 units. The increase came after a 4 percent drop in June.
Another report from the department showed that orders placed with factories for big-ticket goods jumped 5.9 percent in July, the most in 10 months.
The latest batch of economic news was better than analysts had expected. They were forecasting home sales to fall and calling for a much smaller, 1 percent gain in factory orders.
On Wall Street, the reports cheered investors who have been consumed by worry in recent weeks about the country's financial health amid spreading credit troubles.
The housing report showing the July sales boost comes as credit standards have been tightening on home mortgages. Credit problems took a turn for the worse in August, making it even harder for some buyers to get financing. That means home sales in the coming months likely will show renewed weakness, economists said.
"Sales in August will face significant headwinds from further tightening in credit conditions, reduced availability of mortgage credit as many lenders shuttered their doors and upward pressure on mortgage rates, especially for non-conforming jumbo loans" of more than $417,000, predicted Brian Bethune, economist at Global Insight.
By region, sales in the West shot up 22.4 percent in July and increased 0.6 percent in the South. Sales, however, tumbled 24.3 percent in the Northeast and were down 0.9 percent in the Midwest.
The improvement in overall sales didn't change the big picture of the housing market, which has been suffering through a deep slump for more than a year. Sales are down 10.2 percent from last year, and the weakness is expected drag on into next year.
Home prices were mixed. The median price of a new home was $239,500 in July, up 0.6 percent from last year. The median price is the point where half sold for more and half sold for less. The average home price, however, dropped to $300,800 in July, down 3.4 percent from same month last year.
In the manufacturing report, gains were widespread, indicating that capital spending, a key ingredient of a healthy economy, had gained momentum. Orders increased for machinery, automobiles, metal products, airplanes and communications equipment. That blunted a drop in demand for computers, electrical equipment and appliances.
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Link to the original Article by Jeannine Aversa - Associated Press
http://www.azcentral.com/arizonarepublic/business/articles/0825biz-newhome0825.html
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