WASHINGTON - Sales of newly built U.S. homes likely rose to their highest level in a year in August, supported by government-sponsored tax incentives and growing signs of the economy's recovery, according to a Reuters poll.

The survey of 71 economists forecast sales of new single family homes increasing to an annual rate of 440,000 units in August from 433,000 units in July, which was the highest in 10 months. It would be the fifth straight month of advance in sales.

Homes sales have been boosted by an $8,000 tax credit for first-time buyers and the lowest house prices and mortgage rates in decades. With the tax credit expiring at the end of November, there are concerns that sales could slip and stall the housing market's recovery from a three-year slump.

The collapse of the U.S. housing market is one of the main forces behind the domestic economy's worst recession since the Great Depression of the 1930s.

Incoming data continue to suggest the recession that started in December 2007 has probably ended, a factor that analysts said was encouraging people to buy houses.

It appears Americans are growing more interested in home-buying as the economy recovers, wrote analysts at Moody's Economy.com in a research note.

The Commerce Department will release the new home sales report on Friday at 10:00 a.m. EDT.

Following are some forecasts and comments from analysts on the August new home sales data:


Forecast: 450,000 annual rate

Single-family housing permits were flat in August, which should point to a flat reading for new home sales. We are projecting a 3.9 percent increase to 450,000, nonetheless, because of the strong positive impact the tax credit for first-time homebuyers is having on demand.


Forecast: 455,000 annual rate

Moderating price declines have shifted the focus of sales to affordability and the improvement in housing demand is an encouraging sign that the worst effects of the crisis and recession on consumer psychology are fading. Incoming data suggests new home sales increased in August. Sales can rise considerably in coming quarters without approaching the 1.3 million seen at the peak of the housing boom.


Forecast: 440,000 annual rate

An improving economy, low mortgage rates and the first-time homebuyer tax credit are all helping to lift sales. If our forecast is realized, sales would be at their highest level in a year, though even then they would be at one of their lowest levels in the last half century. The combination of low housing starts and rapidly increasing sales has led to a sharp fall in the months' supply of new homes. (Reporting by Lucia Mutikani; Editing by Dan Grebler)