WASHINGTON -- New home sales turned up and factory orders soared in July, suggesting the economy was on stable footing before a credit crunch took a turn for the worse.
The Commerce Department reported yesterday that sales of new homes rose 2.8 percent to a seasonally adjusted annual rate of 870,000 units. The increase came after a 4 percent drop in June.
Another report from the department showed orders placed with factories for big-ticket goods jumped 5.9 percent in July, the most in 10 months.
The latest batch of economic news was better than analysts had expected. They were forecasting home sales to fall and calling for a much smaller, 1 percent gain in factory orders.
The housing report showing the July sales boost comes as credit standards have been tightening on home mortgages.
Credit problems took a turn for the worse this month, making it even harder for some buyers to get financing. In the manufacturing report, gains were widespread, indicating that capital spending -- a key ingredient of a healthy economy -- had gained momentum.