US new home sales in August hit 6-month low

New single-family home sales in the United States fell in August to a 6-month low in a sign the crippled housing market will not provide much support for the flagging economy anytime soon.

The Commerce Department said today sales slipped 2.3 percent to a seasonally adjusted 295,000-unit annual rate. The reading was in line with analysts' forecasts and does little to allay fears the United States could slip back into recession.

The median price of sales slipped 8.7 percent from July, with weak incomes and a moribund job market keeping households wary of investing in a new home.NThe report keeps pressure on the Federal Reserve and President Barack Obama to do more to help the sputtering economy. The Fed last week unveiled new measures to try to ease credit further for homebuyers.

"Sales of new homes are still very depressed," said Gary Thayer, a strategist at Wells Fargo Advisors in St. Louis, Missouri. "There's no sign yet that low mortgage rates are helping the housing sector," he said.

The US economy slowed sharply in the first half of the year and looks vulnerable to any escalation in the European debt crisis. US stocks pared gains after the data, with global equities up on hopes that Europe was tackling Greece's debt woes.

Still, the government raised its estimate for July's sales pace to 302,000 units from the previously reported 298,000 units. Also, the supply of homes available on the market dropped to a record low.

Data last week showed new construction of US homes fell in August, dragging on economic growth. "The housing sector can't get any worse," said Michael Englund, an economist at Action Economics in Boulder, Colorado.