WASHINGTON (AP) -- Factory orders for costly manufactured goods in July recorded the biggest gain in four months. New-homes sales, meanwhile, slid, according to a pair of reports that offered a mixed picture of economic activity.

The Commerce Department reported Wednesday that orders for durables goods -- big-ticket items expected to last at least three years -- rose 1.7 percent in July from the previous month. Helping was a stronger demand for airplanes, machinery and communications equipment.

The largest increase since March followed a 1.1 percent gain in June. Also, July's showing was better than the 1 percent rise that some economists were forecasting.

A second report from the department showed that sales of new homes declined by a sharp 6.4 percent in July from the previous month to a seasonally adjusted annual rate of 1.13 million units. The decline, steeper than analysts expected, left home sales at their lowest level since December.

Sales in June declined 5.6 percent, according to revised figures, which showed sales were even weaker than previously reported.

The drop in home sales comes amid a sluggish jobs climate and high energy prices, which may have made some people wary of making a big financial commitment, analysts say.

Even with the slowdown, the chief economist at the National Association of Home Builders said he thinks sales of both new homes and previously owned homes are still are track to hit new record highs for all of 2004. "There's been some cooling, but the housing market is still in very, very good condition," David Seiders said.