WASHINGTON, Sep 27, 2006 Sales of new homesposted the biggest...

WASHINGTON, Sep 27, 2006

Sales of new homes
posted the biggest increase in five months in August, raising hopes that the
steep slide in the U.S. housing industry may be leveling off.

Sales of new single-family homes increased by 4.1 percent last month to a
seasonally adjusted annual rate of 1.05 million units, the Commerce Department
reported Wednesday. It was the biggest increase since an 8 percent gain in
March.

The August rise followed a 7.5 percent plunge in sales in July, which had
registered the third straight decline.

The gain was far better than the 3 percent decline economists had been expecting
and could signal that housing is beginning to level off after a steep slide.
However, the price of homes sold in August fell to $237,000 (?186,850), down 1.3
percent from August 2005. It was the biggest year-over-year price decline in
more than three years.

From 2001 through 2005, housing enjoyed five consecutive years of record sales,
propelled by the lowest mortgage rates in more than four decades.

However, this year sales have been falling as mortgage rates rose and the
economy slowed. The drop in sales and construction of new homes has been so
sharp that some economists have worried that it could plunge the country into a
recession.

But other analysts argue that recent declines in mortgage rates should help put
a floor on the housing decline.

The increase in new home sales contrasted with earlier reports showing that
sales of existing homes fell in August for a fifth straight month while
construction of new homes and apartments dropped by a sharp 6 percent last
month.

Sales of new homes were up in every region of the U.S. except the West, where
they dropped a sharp 17.7 percent. Sales rose 21.7 percent in the Northeast,
12.2 percent in the Midwest and 11.1 percent in the South.