Gold price under pressure ignores 10% decline in U.S. housing construction
(Kitco News) - The gold market is holding above $1,700 an ounce but remains under pressure even as construction in the housing sector slows for the second consecutive month.
The red hot U.S. housing market appears to be cooling as the market sees less construction and permits in February. Housing starts dropped 10% to a seasonally adjusted annual rate of 1.42 million units last month, the Commerce Department said Wednesday. The data significantly missed expectations as consensus estimates called for an annual rate of 1.56 million homes.
For the year housing construction is down 9%, the report said.
Building permits issue in February also does not bode well for future growth in the housing market. The report said that permits for new construction declined nearly 11% in February to 1.68 million. Economists were expecting to see 1.74 million permits issued.
The gold market is not seeing much reaction to the latest economic data. April gold futures last traded at $1,729.30 an ounce, down 0.23% on the day.
Some economists have noted that some of the weakness in the housing construction sector could be due to cold weather in February. However, other economists note that rising lumber prices could also be dragging down new construction.
Although the U.S. economy was devastated by the COVID-19 pandemic last year, the housing market has been a pillar of strength. The market saw significant demand in the past year due to low interest rates. At the same time, the demand has taken a bite out of supply and driven housing prices higher, pushing many potential first-time home owners out of the market.