Shock at rising sales of US homes

The results surprised economists who had been expecting a drop-off in sales with mortgages at a four-year high.

However there was conflicting news on the nation's economy from the commerce department, which reported a falling demand for expensive durable goods.-

Sales of products from computers to aircraft decreased by 4.8% in April - more than analysts had expected.

'Correction, not trend'

The slide represented a correction rather than a trend after strong growth in February and March, Manufacturers Alliance chief economist Daniel Meckenstroth argued.

But this did not stop shares in Boeing and Honeywell slipping on the release of the figures by the US commerce department - which included a 32.2% drop in demand for aircraft in April.

The median selling price of a home was up just 0.9% on the same time a year ago and down 7.3% on the March level to $238,500 (£127,300).

The number of unsold homes rose by 2.4% to 565,000 properties by the end of April.

However economists believe that the slowdown in housing will be gradual if interest rates do not continue to get pushed higher.