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New home sales fall on pace for record low

Sales of new homes declined in July for the third straight month, a sign that housing remains a drag on the economy.

If the current pace continues, this would be the worst year for new-home sales on records dating back almost a half century.

Sales fell nearly 1 percent in July to a seasonally adjusted annual rate of 298,000, the Commerce Department said Tuesday.

That's less than half the 700,000 that economists say represent a healthy market.

Last year, 323,000 homes were sold -- the worst year on records that go back to 1963.

While new homes represent less than a fifth of the housing market, they have an outsize impact on the economy.

Each home built generates an average of three jobs and $90,000 in taxes, according to the National Association of Home Builders.

All home sales remain weak. The sales pace for previously occupied homes is trailing last year's 4.91 million sales, the fewest since 1997.

In a healthy economy, people buy roughly 6 million previously occupied homes annually.

The troubled housing industry is hurting the broader economy. After previous modern-day recessions, housing contributed up to 20 percent to U.S. economic growth.

That has fallen to 4 percent following the Great Recession.

Sales of new homes have fallen 18 percent in the two years since the Great Recession officially ended.

A telling sign of how bad things have gotten for the housing industry: Prices have dropped more since the recession started, on a percentage basis, than during the Great Depression of the 1930s.

Prices took 19 years to fully recover after the Depression.

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