New-Home Sales in U.S. Jumped 9.6% in July, Most in Four Years

Purchases of new homes in the U.S. jumped more than forecast in July, adding to signs the economy is rebounding from the worst recession since the 1930s.

Sales increased 9.6 percent, the most since February 2005, to a 433,000 annual pace, figures from the Commerce Department showed today in Washington. The number of houses on the market dropped to the lowest level in 16 years.

The gain, together with rising sales of existing homes and steadying prices, indicates the housing slump may be ending as Federal Reserve efforts to thaw credit and the Obama administration's first-time home buyer incentives lift demand. Job losses and mounting foreclosures mean any rebound in construction may be limited.

``The housing market is bottoming out,'' Conrad DeQuadros, a senior economist at RDQ Economics in New York, said before the report. At the same time, ``it's not going to turn around very quickly.''

Economists forecast new home sales would rise to a 390,000 rate, according to the median of 71 projections in a Bloomberg News survey. Estimates ranged from 365,000 to 420,000.

Last month's pace was the highest in 10 months. The Commerce Department revised June's reading up to a 395,000 rate from a previously reported 384,000.

The median price of a new home decreased 12 percent to $210,100 from $237,300 in July 2008. Sales of new homes were down 13 percent from a year earlier.

The jump in sales was led by a 32 percent surge in the Northeast. Purchases increased 16 percent in the South and 1 percent in the West. They dropped 7.6 percent in the Midwest.