TREASURIES OUTLOOK-Prices inch higher as U.S. new-home sales fall

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* U.S. new-home sales weaker than expected.

* U.S. 30-year bond yields fall to seven-week low

* U.S. 10-year note yields slide to two-week trough

By Gertrude Chavez-Dreyfuss

NEW YORK, July 24 (Reuters) - U.S. Treasury debt prices drifted higher on Friday, as investors sought safety in government bonds after a softer-than-expected U.S. housing report and amid a persistent downtrend in commodities and weakness on Wall Street.

U.S. 30-year bond yields, which move inversely to prices, fell to a seven-week low, while benchmark U.S. 10-year yields slid to a two-week trough.

An unexpected drop in U.S. new-home sales further underpinned the rally in the Treasury market. Data showed on Friday that sales of new single-family houses dropped 6.8 percent in June to a 482,000-unit annual rate. The consensus forecast was 517,000.

"Overall, a weaker-than-expected release that has marginally supported the Treasury market, although we'll concede the limited price action has done little to help aspirations for a larger move," said Ian Lyngen, senior government bond strategist at CRT Capital in Stamford, Connecticut.

The U.S. Treasury market also took its cue from stocks and commodities. The S&P 500 was down sharply on the day while the Thomson Reuters CRB index of commodities fell 0.9 percent 0.4 percent.

"It's becoming a trend this week - yields falling. Obviously, there's not a lot of data this week, said Stanley (Shenzhen: 002588.SZ - news) Sun, interest rate strategist at Nomura Securities in New York.

"So the Treasury market right now is kind of hostage to other macro markets."

Next (Other OTC: NXGPF - news) week, market participants are looking to the Federal Open Market Committee meeting. At Fed Chair Janet Yellen's congressional testimony last week, she did not rule out a September hike, but indicated that it was not a certainty.

"We think the upcoming FOMC statement will reflect this non-committal approach. In other words, there will be no explicit tweak to the guidance signaling a hike is imminent," RBC Capital Markets said in a research note.

"Fundamentals have long justified a move away from extreme policy accommodation, and September may also be the Fed's best opportunity to liftoff."

In late trading, benchmark 10-year Treasury notes were up 5/32 in price to yield 2.260 percent, compared with 2.275 percent late on Thursday. Yields earlier fell to 2.255 percent, the lowest since July 9.

U.S. 30-year bonds were up 12/32 in price to yield 2.960 percent, compared with 2.971 percent on Thursday. Yields earlier fell to 2.95 percent, the lowest since June 2.

U.S. seven-year notes were up 4/32 in price, yielding 2.003 percent, from Thursday's 2.023 percent. Earlier, seven-year yields fell to a two-week low of 2.001 percent. (Reporting by Gertrude Chavez-Dreyfuss; Editing by Steve Orlofsky and Christian Plumb)