Washington U.S. sales of new homes soared in July and consumer confidence in the economy stayed close to a record high, government and private reports said Tuesday.
New home sales jumped a larger-than-expected 14.7 percent last month to an annual rate of 944,000, after dropping 7.1 percent in June, the Commerce Department said. The increase was the biggest since April 1993.
Sales were up in all parts of the country except for the Northeast, where they fell. The Midwest led the charge, with a 23.9 percent jump to an annual rate of 192,000.
With plentiful jobs, rising incomes, low inflation and a strong stock market, people are buying despite an upswing in mortgage rates during the past year, economists said.
"Against this backdrop consumers are still very much in a home-buying mood," said Stuart Hoffman, chief economist for PNC Financial Services Group.
The average rate on a 30-year fixed rate mortgage while up from a year ago actually dipped to 8.15 percent in July from 8.29 percent in June, another possible factor in the big jump in sales, some economists said.
Still, the 8.15 percent average rate in July was notably higher than the 7.63 percent average rate for 30-year mortgages in July 1999. Rates are now hovering below the 8 percent mark.
In another report released Tuesday, Americans indicated that they were less confident about the health of the economy in August, but remain optimistic in general about its future prospects.
The Conference Board said its Consumer Confidence Index now stands at 141.1, down from a revised 143 in July and well below the record level of 144.7 measured in January and May. The index was slightly below the 141.4 most Wall Street analysts were expecting.
The index, based on a monthly survey of 5,000 U.S. households, is closely watched because consumer spending makes up about two-thirds of the nation's economic activity.