A PRECIPITOUS drop in sales of new homes and signs of weakening business investment yesterday reinforced rising anxiety about the US economy’s wavering recovery.

Growing uncertainty is keeping buyers and sellers on the sidelines of the housing market and fading government stimulus efforts have washed away demand for new homes.

New home sales fell by 32.4 per cent in July year-on-year to a record low adjusted annual rate of 276,000, commerce department figures showed.

Median house prices also fell, declining by 4.8 per cent to $204,000 (€161,000) in July.

New home sales fell 12.4 per cent between June and July, missing projections that they would be flat during the month, or even creep higher.

The steepest falls were in the northeast and west, where they were down 25.4 per cent.

A glut of unsold homes, rising foreclosures, unemployment and stringent access to credit all mean weak sales will linger, said Mitchell Hochberg, of Madden Real Estate Ventures.

A string of downbeat indicators has heightened fears of a second recession.

Economists at Goldman Sachs said this week that the chance of a “double-dip” recession was between 25 and 30 per cent.

Meanwhile, durable goods orders rose by a meagre 0.3 per cent to $193 billion from June to July, commerce department figures showed.

That was much weaker than analysts had predicted and would have been worse but for a sharp increase in demand for commercial aircraft.

In July, orders for machinery fell 15 per cent, PCs and electronics slid 2.4 per cent, while transport-related orders rose by 13.1 per cent. – Copyright The Financial Times Limited 2010