Americans bought fewer new homes in April as worries about job security helped push sales down by the largest amount in four years.

Sales of new single-family homes fell by 9.5 percent to a seasonally adjusted annual rate of 894,000, the biggest drop since April 1997, the Commerce Department reported Thursday. 

In another government report, the number of Americans filing new claims for state unemployment insurance last week rose sharply, fresh evidence the weakening economy is making it harder for workers to hold onto their jobs. 

The Labor Department said new claims for jobless benefits jumped by a bigger-than-expected 15,000 to a seasonally adjusted 407,000 for the work week ending May 19. 

Economists linked the decline in new-home sales to the worsening labor market and last month's big drop in consumer confidence, which underscored increasing fears among Americans about their jobs and the economy. 

"If you don't have a job or you are very insecure about the one you have, that is the biggest factor in determining whether an expensive purchase, like a new home, is going to be made,'' said Richard Yamarone, economist with Argus Research Corp. 

Still, even with last month's drop, new-homes sales are still at healthy levels, economists said. 

The annualized level of 894,000 posted in April "is still above the average level of the past three years,'' said David Seiders, chief economist at the National Association of Home Builders. He said that new-home sales averaged 885,000 in 1998, 880,000 in 1999 and 877,000 in 2000. "So the level of activity is still good.'' 

Economists were predicting a decline in new-home sales last month, since the slowing economy is reducing demand for workers. 

Seeking to hold off recession, the Federal Reserve has cut interest rates five time this year, totaling 2.5 percentage points. The rate cuts lower borrowing costs and are designed to encourage spending by consumers and investment by businesses, which would stoke economic growth. 

In a speech Thursday, Fed board member Laurence H. Meyer suggested that the period of aggressive Fed easing may be coming to an end because of worries at the central bank about potential inflation problems down the road. 

Saying he was concerned that the underlying rate of inflation has been creeping higher in recent months, Meyer suggested Fed officials may soon have to start worrying that cutting interest rates too much could lead to inflation troubles when the economy does rebound. 

"Attention must also be given to calibrating the easing to avoid overshooting in the other direction in a way that ends up adding to price pressures as growth strengthens,'' Meyer said in a speech to an investment seminar in Edinburgh, Scotland. 

While the economic slowdown has forced companies to cut production and jobs because of slumping demand, housing and construction have generally held up well because of low mortgage rates. 

In April, the average rate on a 30-year fixed-rate mortgage was 7.07 percent, down form 8.20 percent in April 2000. This week, the rate edged up to 7.20 percent. 

But "slowing job and income growth is offsetting lower rates,'' said Merrill Lynch economist Karen Dexter. 

By region, sales in the Northeast fell by 6.3 percent to an annual rate of 75,000 in April. In the Midwest, they declined by 10.9 percent to a rate of 164,000. In the South they fell by 13.1 percent to a rate of 437,000 and in the West sales slipped by 1.4 percent to a rate of 218,000. 

Thursday's figures reflect a change in the way the government calculates new-home sales. The change resulted in the level of monthly sales being revised downward. The new method no longer takes into account new homes under construction before permits were issued. In making this change, the department revised sales figures going back to January 1999. 

In March, sales rose 2.3 percent to a rate of 988,000, according to revised figures, reflecting in part the new methodology. The government previously reported that the level of sales had reached a record monthly rate of 1.02 million. 

In April, the nation's unemployment rate jumped to 4.5 percent, a 0.2 percentage-point increase from March, and businesses slashed payrolls by the largest amount since the last recession a decade ago. 

Some economists worry that if the labor market continues to worsen, consumers — a main force keeping the economy afloat — might sharply cut spending and tip the country into recession. But most analysts believe that consumers will hold up, and the economy will skirt a downturn.