Sales Of New Homes Surge 19.9 Percent

Sales of new homes in May posted the steepest advance in more than three years, lessening the possibility the Federal Reserve will lower interest rates next week.

In a separate report Thursday, the Labor Department said the number of Americans filing firsttime claims for unemployment benefits unexpectedly plunged by 28,000 last week, the biggest drop in nearly a year.

In its report, the Commerce Department said new-home sales surged 19.9 percent, to 722,000 at a seasonally adjusted annual rate, largest since a similar 722,000 rate in March 1994. The previous high was 823,000 in December 1993.

Sales were robust in every region except for the Midwest and they were unchanged there at the highest level since last November.