Gold prices going nowhere fast as U.S. pending home sales rise 1.8%
The gold market continues to trade around $5,000 an ounce and is seeing little reaction to an improvement in the U.S. housing market, as more consumers than expected have begun the process of buying a new home, according to the latest report from the National Association of Realtors (NAR).
The U.S. pending home sales index increased 1.8% in February, the NAR announced on Tuesday. The data was significantly better than forecasts, as economists had expected a 0.6% decline.
However, pending home sales are down 0.8% annually, the report said.
The gold market is not seeing much reaction to the optimistic housing data. Spot gold last traded at $5,013.70 an ounce, relatively unchanged on the day.
Economists note that expectations that the Federal Reserve will eventually cut rates this year have been supporting the U.S. housing market and pushing mortgage rates lower. However, the U.S.-Israel joint war with Iran is threatening to push inflation pressures higher, forcing the U.S. central bank to maintain its neutral monetary policy through the second half of the year.
“The slight gain in pending contracts appears to be driven by improved affordability conditions. However, those conditions could reverse if higher oil prices lead to an uptick in mortgage rates,” said NAR Chief Economist Dr. Lawrence Yun. “The Midwest—the most affordable region of the country—was the strongest performer in February. But the Northeast was held back by a combination of higher home prices and a shortage of supply.”
Yun added that he expects the U.S. housing sector will continue to improve, but it will take some time.
“It takes time to build credit, save for a down payment, and fulfill existing rental lease agreements. Still, there is sizable pent-up demand that could be released into the market. Although job gains have been sluggish in recent months, there are still 6 million more jobs in the country than in the pre-COVID period,” he said.
