Gold Prices Bounce After Disappointing Pending Home Sales Data
(Kitco News) - Gold prices have bounced of a five-week low following data showing further weakness in the housing sector as fewer consumers than expected committed to buying a home in March, according to the latest data from the National Association of Realtors (NAR).
Monday, the association said that its pending home sales index rose only 0.4% in March to a reading of 107.6, compared to February’s downwardly revised level of 107.2. The increase was weaker than expected as economists were expecting to see a 0.6% rise.
While the monthly data was relatively unchanged, pending home sales are down sharply from the previous year. The index is down 3% from March 2016; this is the third consecutive month of annual declines.
While still negative on the day, the gold market has bounced off its session lows in initial reaction to the data. June gold futures last traded at $1,316.20 an ounce, down 0.54% on the day.
According to Lawrence Yun, NAR chief economist, the housing sales are dropping because a lack of supply is driving home prices higher.
“"Steady price growth and the swift pace listings are coming off the market are proof that more supply is needed to fully satisfy demand1. What continues to hold back sales is the fact that prospective buyers are increasingly having difficulty finding an affordable home to buy,” he said in the press release.
"Much of the country is enjoying a thriving job market, but buying a home is becoming more expensive," Yun added. "That is why it is an absolute necessity for there to be a large increase in new and existing homes available for sale in coming months to moderate home price growth. Otherwise, sales will remain stuck in this holding pattern and a growing share of would-be buyers — especially first-time buyers — will be left on the sidelines."
Economists closely watch the pending home sales numbers because the index is seen as a barometer for the housing market. A lag of a month or two usually exists between a contract and a completed sale.