New U.S. single-family home sales slumped to the slowest pace on record in July and orders for costly durable goods were weak, according to government reports on Wednesday that heightened fears the economy was at risk of a new downturn.

The Commerce Department said single-family home sales plummeted 12.4 percent to a 276,000 unit annual rate from a downwardly revised rate of 315,000 in June.

I wouldn't say this is proof of a double dip, but clearly the economy is slowing markedly, and it's a broad-based slowdown, said Michael Woolfolk, senior currency strategist with BNY Mellon in New York.

The manufacturing sector, as well as the housing sector, appeared to be weakening, according the data.

The Commerce Department said new orders for long-lasting U.S. manufactured goods excluding transportation equipment posted their largest decline in 1-1/2 years in July while overall bookings rose far less than expected.

U.S. stock indexes initially fell on the housing report but recovered losses. U.S. Treasury debt prices added to gains, while U.S. dollar erased gains against the yen.

FALSE BOTTOM IN HOUSING MARKET

Weakness in home sales was exacerbated by the end of a popular housing tax credit for first-time buyers that had helped boost sales previously.

What we are seeing is the downside of government intervention. It had fanned expectations of a market bottom when in fact, it created a false bottom, said Tom Porcelli, a senior economist at RBC Capital Markets in New York.

The weak sales pace last month resulted in the supply of new homes available for sale spiking to 9.1 months' worth from 8.0 months' worth in June.

The number of new homes on the market was unchanged at 210,000 units. The median sale price for a new home fell last month from June to $204,000, the lowest since December 2003.

Separately, demand for home loans was moderate last week despite very low mortgage rates.

Mortgage purchase and refinancing applications rose by

less than 1.0 percent in the first week of August, even as 30-year loan rates fell to 4.57 percent -- the lowest in 20 years -- the Mortgage Bankers Association said.

AIRCRAFT DISTORT DURABLE GOODS ORDERS

The durable goods orders report showed orders excluding transportation down 3.8 percent -- the biggest monthly drop since January 2009 -- after rising 0.2 percent in June. Overall orders rose 0.3 percent following a revised 0.1 percent fall in June.

Matthew Strauss, senior currency strategist with RBC Capital markets in Toronto said he was not yet ready to predict renewed recession though the flood of bad news was worrying.

I think we're not yet looking at double-dip as a base case scenario, but clearly the risk of entering into a period of very, very sluggish growth has risen, Strauss said.

Analysts polled by Reuters had forecast orders increasing 2.8 percent last month from June's previously reported 1.2 percent fall. Orders excluding transportation had been forecast to increase 0.5 percent from a previously reported 0.9 percent fall.

Durable goods orders are a leading indicator of manufacturing and last month's moderate increase was the latest indication the sector that has been the main driver of the economy's recovery from the worst downturn since the Great Depression is losing some steam.

Overall orders last month were lifted by the volatile commercial aircraft component, which jumped 75.9 percent after a surprise 25.3 percent fall in June. The jump last month reflected 130 aircraft orders received from Boeing and probably included some of the 49 plane bookings in June.

Defense aircraft orders dropped 8.3 after rising 5.7 percent in June, while motor vehicle orders rose 5.3 percent after June's 4.0 percent rise.

Orders outside transportation were depressed by weak bookings for machinery, electrical equipment and computers and related products and

Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending, fell 8.0 percent last month after a 3.6 percent increase in June. Markets had expected a 0.4 percent rise last month.

The strength of second quarter GDP was business spending. It looks like businesses are pulling back from this commitment in a very big way in July. It's an indication of how sentiment is deteriorating, said Christopher Low, chief economist at FTN Financial in New York.

Durable goods inventories rose 0.6 percent after increasing 1.3 percent in June. It was the seventh straight month of gains in inventories.

Shipments, which go into the calculation of gross domestic product, last month rose 2.2 percent, adding to June's 0.2 percent gain. Unfilled orders slipped 0.1 percent after rising for three straight months.