New-Home Sales in U.S. Increase From 17-Year Low (Shobhana Chandra)

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(Bloomberg) -- New-home sales in the U.S. improved in July from a 17-year low and construction cutbacks by builders reduced the glut of properties on the market by the most in almost five decades.

Sales increased 2.4 percent to a 515,000 annual pace that was lower than anticipated after a downwardly revised 503,000 rate in June, the Commerce Department said today in Washington. The number of unsold homes on the market fell 5.2 percent, the most since November 1963, to a 416,000 pace.

Lower prices have made homes more affordable for Americans still able to obtain a mortgage, stemming the slide in demand and making it more likely the property glut will clear. A more stable housing market would eliminate one of the biggest risks to the economy even as the credit crisis and job losses threaten growth.

``We're hopefully getting in the vicinity of a bottom,'' David Resler, chief U.S. economist at Nomura Securities International Inc. in New York, said before the report. Still, ``we're a long way from a recovery. We'll see activity at low levels for a while.''