WASHINGTON, Oct 27: Government reports on Thursday suggested a possible cooling in the housing market and some economic slowdown due to high energy prices, but analysts said the economy remained robust enough to permit the Federal Reserve to keep raising borrowing costs.

The Commerce Department said sales of new homes rose more slowly than expected last month and house prices dropped, while new orders for durable goods fell sharply.

However, another report from the Labour Department showed a bigger-than-expected drop in first-time claims for jobless benefits last week. Claims had shot up in the wake of Hurricanes Katrina and Rita, but have come down in the past two weeks.

“We’re still getting some mixed data because of the impact of the hurricanes, but the underlying economy still looks healthy,” said Gary Thayer, chief economist at A.G. Edwards & Sons in St Louis. “So I don’t think today’s data change the Fed’s thinking about raising interest rates.”

The Fed has increased overnight borrowing costs 11 times since June 2004 in a bid to head off inflation concerns. Policy-makers meet again next week and are expected to boost benchmark interest rates again.

Sales of new single-family homes rose 2.1 per cent in September to a seasonally adjusted annual rate of 1.222 million units. But the sales pace for June, July and August were all revised lower, and September’s rate came in below the 1.250 million units pace expected by Wall Street economists.

The department said Hurricane Katrina had a minimal impact on new residential sales for September, which were 0.1 per cent slower than a year earlier.

While sales rose, the supply of homes available for sale shot up to a record 493,000 at the end of September and the median price fell 5.7 per cent to $215,700 — two signs of a possible cooling in the housing boom.—Reuters