WASHINGTON – Motivated by low mortgage rates, house hunters turned into buyers, sending new-home sales in July to the highest monthly level on record and giving a solid boost to sales of previously owned homes.

The pair of housing reports, released Monday, provided a dose of good news for the economic recovery, which has been advancing, but in fits and starts.

Sales of new homes in July climbed to a seasonally adjusted annual rate of 1.02 million, a record monthly sales pace and a 6.7 percent hike from June’s level, the Commerce Department reported Monday.

Meanwhile, sales of existing homes – the biggest slice of the housing market – rebounded in July, rising 4.5 percent from the previous month to a rate of 5.33 million units, according to the National Association of Realtors.

While the information was not broken down by state, Realtors in Maine sold 5,729 homes in the first half of this year – 14 percent more than for the same period a year ago – according to the Maine Association of Realtors, a statewide listing service. The median sale price also increased from $120,000 in the first half of 2001 to $133,000 in the first half of 2002, a more than 10 percent jump. The median price is the price at which half the homes sold for more and half sold for less.

One of the bright spots of the spotty economic recovery has been the housing market, which performed well even during last year’s recession, due largely to low mortgage rates.

In July, the average rate for a 30-year fixed-rate mortgage was 6.49 percent, down from 6.65 percent in June, and well below the 7.13 percent rate for July a year ago, according to Freddie Mac, the mortgage company. Last week, rates on 30-year mortgages edged up to 6.27 percent, after dipping to a 32-year low in the previous week.

On Wall Street, cautious investors gave a modest boost to stock prices Monday. The Dow Jones industrial average gained 46.05 points to close at 8,919.01.

Another factor motivating home buyers: Solid appreciation in housing values. That offers people an attractive investment, especially given the volatility of the stock market, economists said.

In July, those factors offset potentially negative ones, including eroding consumer confidence and a stagnant job market.

“Things couldn’t be better on the financing side. We’re seeing nice, strong upward movements in house values in most places, and I also think we’re still seeing a rally around hearth and home that followed the 9-11 terrorist attacks,” said David Seiders, chief economist at the National Association of Home Builders.

However, in June, new-home sales fell 2.6 percent and existing-home sales plunged 11.1 percent as worries about jobs, the roller-coaster stock market and the direction of the economy seemed to weigh heavily on prospective buyers. Yet, even with the declines, the level of sales remained healthy.

Economists believe both new-home and existing-home sales will set records this year. Seiders predicts new-home sales will hit 936,000. David Lereah, chief economist for the National Association of Realtors, is projecting existing-home sales to reach 5.44 million.

Hoping to give a helping hand to the recovery, Federal Reserve policy-makers have held short-term interest rates steady all year. Policy-makers earlier this month opened the door to future rate reductions.

Low rates might induce consumers, the driving force behind the economy, to keep on spending and businesses to boost investment, fostering economic growth.

By region, new-home sales in July soared 16 percent in the Midwest to a rate of 203,000, the highest level since December 1993. In the South, sales jumped 10.1 percent to a rate of 470,000, the highest level since November.

But in the Northeast, sales fell by 9.1 percent to a rate of 60,000, and in the West, they dipped by 0.4 percent to a rate of 284,000.

The average price of a new home in July was $215,200, up 2.8 percent from the same month last year. But the median price was $170,500, a 2.6 percent decline from a year ago.

For existing homes, July’s sales jumped 10.2 percent in the Midwest to a rate of 1.19 million. In the South, sales rose 6.4 percent to a pace of 2.17 million and in the Northeast, they went up 4.9 percent to a rate of 640,000. But in the West, sales slipped 2.9 percent to a rate of 1.33 million.

The median price of an existing home was $162,800 in July, a 7.3 percent increase from the same month a year ago.

“A continued solid gain in prices of existing homes – a proxy for housing wealth- suggests that rising home equity will continue to buffer any weakness in equity wealth and sustain household spending,” said Maury Harris, chief economist at UBS Warburg.