New orders for U.S. manufactured durable goods in August, and sales of new homes rose to expectations, government data showed on Friday, prompting fears that the recovery from the recession would be anemic.

The Commerce Department reported that overshadowed a rise in consumer confidence this month to its highest level since January last year and were the latest indication that growth could decline once the government stimulus expired.

Orders for durable goods fell 2.4 percent in August, the largest percentage decline since January, after rising 4.8 percent in July, the Commerce Department. That was well below market expectations for a 0.5 percent increase in August.

In another report, the Department said sales of new single-family home construction rose 0.7 percent in August for the fifth consecutive month to an annual pace of 429,000 units, the highest since September last year. However, the increase was below market forecasts for a rate of 440,000 units.

"The trend remains positive, but not gigantic solid growth, because we have a lot of consumer spending continues," said Kurt Karl, head of economic research and consulting at Swiss Re in New York.

U.S. Stocks fell in the data, the delivery of all three indices of its biggest weekly decline since early July. Long-dated bond prices of government met in the news.

Durable goods orders and reports new home sales came on the heels of a survey showing a drop in purchases of homes use in August, and served as a reminder that recovery from its worst recession since the 1930s would be long and bumpy.

"While the recovery is gaining momentum, a number of major speed bumps on the horizon," said Brian Bethune, chief U.S. economist Global Financial Insight in Lexington, Massachusetts.

"These include the expiration of tax incentives to support the housing market in November and uncertainty about the potential impact of the exit strategy of the Federal Reserve" on the availability of credit to critical areas such as cars and financing mortgage.

Federal Reserve Chairman Ben Bernanke said on Friday, and small consumer lending business remained in great need of support from the U.S. Central Bank, including the use of other financial support programs declining markets recover balance.

In a statement issued at the end of a two-day meeting in Pittsburgh, leaders of the Group of 20 rich and developing countries agreed to avoid the early withdrawal of stimulus, which pledged to hold in place until the sustainable recovery instead.

AIRCRAFT HIT Durable Goods

The drop in durable goods orders, the main gauge of manufacturing activity was largely caused by reduced new orders for commercial aircraft - probably a decrease in orders received by Boeing.

However, new orders for durable goods excluding transportation was flat in August after rising for three consecutive months, the Commerce Department. The market had expected an increase of 1 percent after a 1.1 percent increase in July.

No capital goods excluding aircraft, a proxy for business investment, fell unexpectedly by 0.4 percent in August - confounding market expectations for an increase of 1.3 percent. Core capital goods fell 1.3 percent in July.

"The road to recovery, as is well evident today, is full of bumps and holes. But we're still on that path," said Jennifer Lee, economist at BMO Capital Markets in Toronto.

Although household spending remains constrained by a weak job market, consumers are beginning to feel optimistic about the prospects of the economy. Analysts expect this to translate into increased consumer demand on the road.

The Reuters / University of Michigan final index of consumer sentiment for September rose to 73.5 - the highest since January 2008 - from 65.7 in August. This was above economists' expectations for a reading of 70.3.

Separately, total new home sales fell 3.4 percent compared with last August, showed data from the Commerce Department.

The median home sales price in August fell 11.7 percent from the previous year to $ 195,200, the lowest level since October 2003, the department said. In July the average price was $ 215,600.

The inventory of homes available for sale at the end of August fell 3.0 percent to 262,000 units, up 17, near its lowest in a year. The August sales pace left the supply of homes available for sale to 7.3 months, the lowest level since January 2007, the department said.