Gold Prices Turn Positive After 2.4% Fall In Pending Home SalesBy Kitco News
Thursday September 29, 2016 10:10
(Kitco News) - Gold prices have managed to find some traction Thursday, following data that point to weaker U.S. home sales in the next few months.
Thursday, the National Association of Realtors (NAR) said that its pending home sales index fell 2.4% in August to a reading of 108.5, compared to July’s downwardly revised level of 111.2. The drop was much larger than expected as economist expectations as consensus forecasts were calling for a fall of 0.1%.
According to reports, this is the second lowest reading for the year and the index is down 0.2% compared to last year.
"In most other areas, an increased number of prospective buyers appear to be either wavering at the steeper home prices pushed up by inventory shortages or disheartened by the competition for the miniscule number of affordable listings,” said Lawrence Yun, NAR's chief economist in the report.
Ahead of the report gold was trading in negative territory, reacting to better than expected gross domestic product data for the second quarter. However since the housing data prices have jumped into the green; December gold futures last traded at $1,324.50 an ounce, up 0.06% on the day.
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.
Gold prices push into positive territory following 2.4% drop in August pending home sales. December gold last traded at $1,323.80 an ounce.
Although the latest housing data point to decreasing sales in the next few months, Royce Mendes, senior economist at CIBC World Markets is shrugging off any potential weakness saying that the numbers are still with its range established since 2015.
“The weakness in pending sales suggests that there could be a slight deceleration in existing home sales moving forward. That said, the level of sales remains at a relatively healthy rate historically,” he said.