New-home sales unexpectedly spiked 9.6% in July following a 9.1% rise in June, another sign that the housing market could indeed be on the mend.

According to figures compiled by the U.S. Census Bureau, sales of new single-family homes rose to a seasonally adjusted annual rate of 433,000 in July, compared to a 395,000 rate in June. The June rate was revised upward by 11,000 sales.

Weiss Research analyst Mike Larson said sales were "hotter" than expected. "This is clear evidence the dramatic cut in housing starts, plus increasing consumer confidence and the targeted tax credit for first-time buyers is restoring stability to the new home market," he said. The federal government's $8,000 federal tax credit expires later this year. The National Association of Home Builders and other trade groups are lobbying to have it extended.

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