US economy: Sales of new homes down 12.4 per cent in July

A sharp drop in sales of new homes last month has confirmed the bleak picture of the US housing market, a day after existing home sales data also plunged to the lowest level since records began in the 1960s. Sales of single-family homes fell 12.4 per cent to an annualised rate of 276,000, from a downwardly-revised 315,000 in June.

Economists had forecast a rise to 333,000 but were braced for disappointment amid mounting evidence that the withdrawal of government tax credits to first-time buyers had stalled the recovery. The median price of a new house was down 4.8 per cent.

There was also weak data from the manufacturing sector. Orders for durable goods, including "big-ticket" items like kitchen appliances, or business investment in factory equipment and computers, rose by less than was anticipated.