UPDATE 1-U.S. new home sales tumble to record low in July

(Adds details, market reaction)

WASHINGTON, Aug 25 (BestGrowthStock) – New U.S. single-family home
sales unexpectedly fell in July to set their slowest pace on
record while prices were the lowest in more than 6-1/2 years,
government data showed on Wednesday.

The Commerce Department said sales dropped 12.4 percent to
a 276,000 unit annual rate, the lowest since the series started
in 1963, from a downwardly revised 315,000 units in June.

Analysts polled by Reuters had forecast new home sales
unchanged at a 330,000 unit pace last month.

“What we are seeing is the downside of government
intervention. It had fanned expectations of a market bottom
when in fact, it created a false bottom,” said Tom Porcelli, a
senior economist at RBC Capital Markets in New York.

“We expect home sales to stay at this remarkably low range
with remarkably high unemployment. There is also little demand
for lending.”

U.S. stock indexes initially fell on the report before
recovering losses. U.S. Treasury debt prices added to gains,
while U.S. dollar erased gains against the yen.

The housing market has wobbled following the end of a
popular home tax credit in April, which had boosted sales and
construction. The sector was at the center of the longest and
deepest recession since Great Depression and its continued
weakness is holding back the broader economic recovery.

Data on Tuesday showed sales of previously owned homes
dropped in July to their slowest pace in 15 years. While the
end of the tax credit is distorting the housing data, a 9.5
percent unemployment rate is also worsening the situation.

The weak sales pace last month resulted in the supply of
new homes available for sale spiking to 9.1 months’ worth from
8.0 months’ worth in June.

The number of new homes on the market was unchanged at
210,000 units. The median sale price for a new home fell last
month from June to $204,000, the lowest since December 2003.

Separately, demand for home loans was moderate last week
despite very low mortgage rates.

Mortgage purchase and refinancing applications rose by
less than 1.0 percent in the first week of August, even as
30-year loan rates fell to 4.57 percent — the lowest in 20
years — the Mortgage Bankers Association said.

(Reporting by Lucia Mutikani; Editing by James Dalgleish)

UPDATE 1-U.S. new home sales tumble to record low in July