By Lucia Mutikani

WASHINGTON (Reuters) - U.S. home resales hit their highest level in nearly 9-1/2 years in June as low interest rates lured first-time buyers into the market and the number of Americans filing for unemployment benefits fell last week, underscoring the economy's strength.

Although another report on Thursday showed factory activity in the mid-Atlantic region contracted this month, a surge in new orders and shipments suggested the setback was likely temporary.

"The economy is doing well and is weathering the global turbulence. With housing and consumers powering ahead, some of the clouds are dissipating and summer looks good from a data point of view," said Thomas Costerg, a U.S. economist at Standard Chartered Bank in New York.

The National Association of Realtors said existing home sales increased 1.1 percent to an annual rate of 5.57 million units last month, the highest level since February 2007.

It was the fourth straight month of increases and left sales 3 percent higher than a year ago. Economists polled by Reuters had forecast sales slipping to a 5.48 million-unit pace in June.

Sales were boosted by first-time buyers, whose share of transactions rose to 33 percent in June, the highest since July 2012. That compared to 30 percent in May and a year ago.

The increase in first-time buyers, whose participation is considered crucial for a strong housing market, came as U.S. mortgage rates hit their lowest levels since 2013 on bets the Federal Reserve would be cautious about raising interest rates.

Britain's vote on June 23 to leave the European Union has also put downward pressure on borrowing costs for home buyers as investors pile into safe-haven U.S. government debt.

The housing market is being supported by a strengthening labor market, but sales remain constrained by a persistent shortage of properties available for sale, which is keeping home prices elevated. There were 2.12 million previously owned homes on the market last month, down 0.9 percent from June.

The median price for a previously owned house rose 4.8 percent from a year ago to a record $247,700 in June.

"We expect this buoyant performance to continue during the second half of this year, underpinned by strong employment growth, low mortgage rates and continued confidence in the economic recovery," said Millan Mulraine, deputy chief economist at TD Securities in New York.

The broader PHLX housing index <.HGX>, including builders, building products and mortgage companies, was down 0.14 percent, tracking a slightly weak U.S. stocks market.


The dollar was little changed against a basket of currencies, after the European Central Bank gave no hint that it was set on easing policy further in September to support growth. Prices for U.S. government bonds fell.

In a separate report, the Labor Department said initial claims for state unemployment benefits slipped 1,000 to a seasonally adjusted 253,000 for the week ended July 16, the lowest reading since April. Claims are near the 43-year low of 248,000 touched in mid-April.

Economists had forecast initial claims rising to 265,000 in the latest week. Claims have now been below 300,000, a threshold associated with a healthy labor market, for 72 straight weeks, the longest stretch since 1973. The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 1,250 to 257,750 last week.

The claims data covered the survey week for July's nonfarm payrolls. The four-week average of claims fell 9,000 between the June and July periods, suggesting another month of strong job gains. The economy added a whopping 287,000 jobs in June, the largest this year.

"The claims data continue to signal very low layoffs and that the employment report for July will be solid," said John Ryding, chief economist at RDQ Economics in New York. "These data point to a further tightening of the labor market in terms of readily employable underutilized labor."

Labor market strength is boosting consumer spending and the housing market, which in turn are providing a lift to economic growth.

According to a Reuters survey of economists, the government is expected to report next week that the economy grew at a 2.6 percent annualized rate in the second quarter, an acceleration from the 1.1 percent pace logged in the first three months of the year.

In a third report, the Philadelphia Federal Reserve said its business index fell to a reading of -2.9 this month from 4.7 in June. But the new orders component rose to 11.8 from -3.0 in June and shipments rebounded to 6.3 from -2.1 in June.

Manufacturing has been hurt by a strong dollar and sluggish global demand, which have undercut U.S. exports, as well as efforts by businesses to reduce an inventory overhang. Lower oil prices have also weighed on manufacturing as energy firms cut back on capital spending in response to reduced profits.

(Reporting By Lucia Mutikani; Additional reporting by Jason Lange; Editing by Andrea Ricci)