WASHINGTON, Aug 26 - Sales of U.S. new homes dipped 2.9 percent in July, but were still ahead of expectations because June's record high sales pace was even greater than believed, a government report showed on Tuesday. The Commerce Department said sales of new single-family homes slipped to a seasonally adjusted 1.165 million annual rate -- the second highest pace on record -- from an upwardly revised 1.200 million rate in June. Analysts polled by had on average forecast a 1.150 million rate.
Inventories equaled June's record low of 3.5 months' supply of homes available for sale at the current sales pace. Buyers snapped up new homes at a record high rate in the South, the nation's largest market for new homes, posting a seasonally adjusted annualized 572,000 rate. The busy U.S. housing market has been a bright spot in an otherwise struggling U.S. economy as mortgage interest rates slipped to lows not seen since the 1960s. But a recent climb in interest rates -- the 30-year fixed rate mortgage has jumped more than 1 percentage point to 6.28 percent from June's lows -- is expected to eventually slow housing activity.//