Reports Hint at Slowing Pace of U.S. Economy

WASHINGTON — New-home sales fell for a second straight month in August and a key economic gauge was flat, government and industry reports showed Wednesday, as a weaker stock market sapped some of the economy’s vigor.

From a record peak in June, sales of new homes fell 4.9% in July to a revised seasonally adjusted annual rate of 877,000, and slipped another 4.4% in August to 838,000, the slowest sales rate since 836,000 in March, the Commerce Department said. The slowdown was concentrated entirely in the South.

Separately, the Conference Board said its index of leading indicators was flat in August at 105.5, in line with expectations, because a sharp fall in stock prices canceled other positive contributors.

The index had risen 0.4% in July, but in August, four of 10 separate measures in it declined and one was unchanged, the private research group said. The other five measures, led by a higher money supply, improved from July.

“The overall economy remains healthy,” said Conference Board economist Michael Boldin, adding that a majority of the other nine economic measures making up the index were in positive territory.

Analysts said Wednesday’s reports implied some cooling in a still-healthy pace of national economic activity, with cheaper interest rates helping offset the impact of weaker exports to suffering Asian and other foreign markets and of volatile U.S. stock prices.

“It is clear that though vigorous growth is not in store for the next six months, we should expect continued stable growth for the rest of this year,” said Jerry Jasinowski, president of the National Assn. of Manufacturers.

Another report from Midwestern purchasing managers buttressed that view as the Chicagoland Business Barometer moved up to a seasonally adjusted 55.2 in September, from 49.3 in August. It was boosted by a bounce back in auto production by the U.S.’ No. 1 car maker, General Motors Corp., which has been pushing assemblies after ending a lengthy strike in late July.

In the South, home sales plunged 13.6%, the sharpest monthly decline for sales in the region since an 18% drop in August 1995.

August sales rose 3.3% in the West and were up 5.8% in the Northeast and 4.9% in the Midwest.

Home sales peaked at a record 922,000-a-year rate in June. Even with the nearly 10% drop from that level, August sales remained 4.9% above the year-earlier rate of 799,000 recorded in August 1997.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

NEW--HOME SALES

Seasonally adjusted annual rate, in thousands of units:

August: 838,000

*

Source: Commerce Department