WASHINGTON (AP) - Americans cut back sharply in July on their purchases of new homes, a sign that higher mortgage rates may weigh on the housing recovery.
The Commerce Department says new-home sales dropped 13.4 percent to a seasonally adjusted annual rate of 394,000. That's down from a sales pace of 455,000 in June, which was revised sharply lower from a previously reported 497,000.
Other reports suggest higher mortgage rates could be slowing the housing market's momentum. In July, builders started work on the fewest single-family homes in eight months. And mortgage applications from potential buyers have fallen since rates have risen more than a full percentage point.
Still, most economists expect the housing recovery will persist. Even after July's steep drop, new-home sales were 7 percent higher than 12 months earlier.
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