New-Home Sales Grow, Spur Wall St.

New-home sales grew 2.8% last month, delivering an unexpected bit of good news to investors still reeling from the credit crunch. But the housing market, which had been rebounding in recent months from a slump, will likely show renewed weakness after he mortgage crisis dust settles, Bloomberg reports.

Officials at the Federal Reserve say the nation’s worst housing slump in 16 years will continue to dog its economic growth, conceding that pessimism in the real estate sector could spread to other areas of the economy. One analyst speculated that tougher restrictions on credit “could further dampen residential investment.” (More home sales stories.)