BasicAuth config question

[pg151 at dev-mail.net]

If I define

	nginx.conf
		...
		server {
			...
			include includes/conf1.inc;
			include includes/conf2.inc;
			...
		}
		...

	cat includes/conf1.inc;
		location ~ ^/sec($|/$) {
			deny all;
		}

	cat includes/conf2.inc;
		location = /sec/status {
			auth_basic 'Secure Access';
			auth_basic_user_file  /etc/nginx/sec/users;
			stub_status on;
		}

@ https://example.com/sec/status

displays, as intended, a HTTP Basic Auth challenge.

But, if I move the auth_basic* into the immediately prior config file,

	cat includes/conf1.inc;
		location ~ ^/sec($|/$) {
			deny all;
		}
+		location ~ ^/sec {
+			auth_basic 'Secure Access';
+			auth_basic_user_file  /etc/nginx/sec/users;
+		}

	cat includes/conf2.inc;
		location = /sec/status {
-			auth_basic 'Secure Access';
-			auth_basic_user_file  /etc/nginx/sec/users;
			stub_status on;
		}

@ https://example.com/sec/status

displays server status immediately, WITHOUT any HTTP Basic Auth challenge.

What's wrong with my 2nd config that's causing it to NOT invoke Basic Auth challenge?