WASHINGTON - The economy remains on a mild growth track, analysts said yesterday after separate reports showed sales of existing homes surged in July while orders to factories for durable goods fell.

The National Association of Realtors said existing home sales jumped 5.4% to a seasonally adjusted annual rate of 3.69 million, the highest level recorded all year. The group attributed the increase, which came in all regions of the country except the Northeast, to record-low mortgage interest rates.

A separate report issued by the Commerce Department says orders for durable goods tumbled 3.8%, the fourth downturn in the last five months. But analysts said the report was not as weak as it seemed because most of the drop came in the defense and transportation sectors, where order flows are volatile.

"I think we're still trudging along," said Mark Obrinsky, senior economist for the Federal National Mortgage Association. "There's certainly not enough in both reports to suggest we've moved to a higher level of growth, but there's nothing to suggest we've moved to a lower level, either."

Many economists continue to predict that gross domestic product will grow 2 1/2% to 3% in the second half of the year, which would represent a modest pickup from the anemic 1.6% pace of the second quarter reported last month. The Commerce Department is scheduled to issue a revised report on second-quarter GDP growth on Tuesday.

Analysts said existing home sales are finally taking off in response to interest rates that have tumbled to historic lows across the board. According to the Federal Home Loan Mortgage Corp., the average national rate for a fixed 30-year mortgage fell to 7.21% in July, and since then rates have edged down further.

"If the job market were stronger, we'd be seeing more home sales than we're seeing now, but these low rates clearly are helping," said Obrinsky.

"Summer generally is busy, but this year is extraordinary," said William S. Chee, president of the realtors association, in a statement. "More and more ~sold' signs are going up."

The association said sales in July advanced in all regions except the Northeast, where they slipped 1.8% to 560,000 from 570,000. In the Midwest, despite flood damage, they jumped 9.4% to 1.05 million from 960,000. Sales in the West surged 9.5% to 810,000 from 740,000, and in the South they were up 3.5% to 1.46 million from 1.41 million.

Compared with a year earlier, total home sales were up 14.9%, with gains in all regions.

"It looks like the real estate market, which contracted in the second quarter, is going to show a fairly marked turnaround," said Thomas Carpenter, chief economist for ASB Capital Management Inc. "We see the economy responding to lower rates."

The purchasing index of the Mortgage Bankers Association has climbed above 170 from only 116 in January, and is now "approaching record levels," said David Lereah, chief economist.

The continuing boom in home refinancings is also helping to put cash in consumer pockets, analysts said. The mortgage banker's refinancing index is over 1200, more than three times higher than the level recorded in January.

Analysts were less impressed with the 3.8% drop in July orders for durable goods, in part because it followed a revised gain of 4.5% in June and because the weakness was concentrated in transportation and defense. "We're getting pretty good order growth in a number of areas, particularly building materials and electronics and communication equipment," said Mark Vitner, an economist with First Union National Bank in Charlotte, N.C.

Civilian airlines remain weak as carriers struggle with cut-rate fares and sluggish demand, analysts said. In the case of automobiles, company-wide vacations and plant shutdowns for model changeovers slashed shipments and orders, but production is expected to rebound in the fall, said economists at Chemical Securities Inc.

Commerce Secretary Ronald Brown issued a statement expressing disappointment over the drop in durable goods orders but said that "there are some positive signs in the report. Excluding transportation, orders were up 1.3%."

"The fundamentals of long-term growth - low interest rates and low inflation - are coming into focus," said Brown. "While this report has elements of weakness, we expect these fundamentals to begin to drive the economy in the months ahead. "

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