Sales of newly built U.S. homes fell for a fourth straight month to a record low in February, but another rise in new orders for durable goods offered assurance that the economic recovery was on course.

The mixed data on Wednesday underscored that while growth continues, laggards such as housing and the labor market are standing in the way of a full recovery.

The economy continues to be on a slow to moderate recovery. I don't see a relapse in the housing market, not right now, said Nick Kalivas, vice president of financial research at MF Global in Chicago.

Single-family home sales fell 2.2 percent to a 308,000 unit annual rate, the Commerce Department said, surprising markets that had expected a 320,000 unit pace.

In a second report, the department said new orders for long-lasting manufactured goods increased 0.5 percent in February, rising for the third straight month, and January's figures were revised higher to show a 3.9 percent increase.

Markets had expected orders to gain 0.7 percent in February from the previously reported 2.6 percent rise.

The housing data came on the heels of report on Tuesday showing existing home sales fell for a third straight month in February while the supply of houses on the market jumped.

Analysts said snowstorms that lashed parts of the country last month contributed to the drop in new home sales, but acknowledged the underlying trend remained weak.

U.S. financial markets were little moved by the mixed economic data, looking elsewhere for direction. The downgrading of Portugal's credit rating sent U.S. stock indexes lower, while the dollar rallied to a 10-month high against the euro.

Home sales have barely responded to the extension and expansion of a popular tax credit, which boosted purchases in the second half of 2009. This has raised concerns over the fragile housing market's recovery just as a key pillar of support is being dismantled.

The Federal Reserve will end purchases of mortgage-related securities next week, which had lowered the cost of home loans to record lows and helped the housing market claw out of a three-year slump.

SPRING REVIVAL EYED

Still, analysts are hoping a last minute rash by buyers to qualify for the extended tax credit before its June expiration could lift sales in the coming months. An anticipated pick up in employment is also expected to support future sales.

New-home sales are likely to pick up this month. In the second half of this year, demand drivers of housing should improve as the job market stabilizes and begins to add jobs, said Celia Chen, a senior director at Moody's Economy.com. in West Chester, Pennsylvania.

The prospect of more foreclosures flooding the market, however, will keep improvements in the housing market very modest through the rest of this year.

Home-builder Lennar Corp also struck cautiously optimistic note on the housing market and said it was on track to make a profit this year.

A report by the Mortgage Bankers Association showed U.S. mortgage applications fell for a second straight week, with demand for home loan refinancing sinking to its lowest level in a month as interest rates jumped.

While the housing market is still struggling, manufacturing continues to expand as businesses rebuild inventories.

Manufacturing is leading the economy's recovery. Durable goods inventories rose 0.3 percent, the biggest gain since December 2008, after rising 0.1 percent in January.

Last month, new durable goods orders excluding transportation rose 0.9 percent in February after falling 0.6 percent the previous month. Excluding defense, orders were up 1.6 percent after a 1.7 percent rise in January.

Durable orders data provide further evidence that manufacturers are enjoying a healthy recovery, driven by restocking and the turnaround in world trade, said Paul Dales, a U.S. economist at Capital Economics in Toronto.

Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending, rebounded 1.1 percent last month after a 3.9 percent fall in January.

But shipments, which go into the calculation of gross domestic product, extended their decline in February. That caused some economists to trim their forecasts for first quarter GDP growth.

Unfilled orders increased for second straight month in February and recorded their largest gain since July 2008.

(Additional reporting by Julie Haviv in New York; Editing by Neil Stempleman)

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