New home sales rose a tepid 0.7 percent last month, missing Wall Street expectations and providing more evidence the housing market recovery remains tentative.

The Chinese market is likely to fall 25 percent, taking U.S. stocks with it, with the S&P 500 possibly falling below 800, Robin Griffiths, technical strategist at Cazenove Capital, said Monday. But then U.S. indexes will rise again for a substantial amount of time, with the Dow estimated to rise to 1,250, he added.

Shares of most homebuilders moved higher Monday after a big jump in house resales last month.

Fresh signs that the economy is stabilizing  emerged Tuesday in reports that home construction rose more than expected last month and wholesale prices remain in check.