Leap In New Home Sales Sends Homebuilders Higher

NEW YORK (AP) — The upwards tear in homebuilder stocks continued Wednesday as a government report showed a big leap in sales of new homes last month, yet another sign of recovery in the battered housing market.

The Commerce Department said new U.S. home sales rose 9.6 percent in July to a seasonally adjusted annual rate of 433,000 unit sales. That's the fourth straight monthly gain and the strongest sales pace since September.

The number of unsold homes on the market also shrunk to the smallest amount since April 2007.

On Tuesday, meanwhile, the Standard & Poor's/Case-Shiller index showed that home prices increased quarter-over-quarter for the first time since mid-2006. Prices are still down nearly 15 percent from the second quarter of last year and 30 percent from their peak in 2006.

The crisis in housing helped drag the country into recession, the country's longest since World War II. There's been a surge in homebuilders' stocks this summer as markets take these reports as evidence of a recovery in housing. An exchange-traded fund designed to track the S&P Homebuilders Select Industry Index is up about 45 percent since early July.