News Bites
Gold price holding near two-month high following drop in U.S. existing home sales
(Kitco News) - The gold market continues to hold at its highest level since November as weak home sales data provides some support for prices.
Existing home sales rose to a seasonally adjusted and annualized rate of 6.18 million units last month, down 4.6% compared to November’s annualized rate of 6.46 million homes, the National Association of Realtors (NAR) said on Thursday. Market consensus projections called for existing home sales fall only slightly to 6.42 million.
The association noted that December’s drop in existing home sales ended three-months of consecutive increases.
Spot gold prices last traded at $1,846.20 an ounce, up 0.32% on the day.
While the housing market ended the year on a disappointing note, the NAR noted that 2021 was a strong year with home sales rising 8.5%.
"December saw sales retreat, but the pull back was more a sign of supply constraints than an indication of a weakened demand for housing," said Lawrence Yun, NAR's chief economist. "Sales for the entire year finished strong, reaching the highest annual level since 2006."
However, looking ahead, Yun said that rising interest rates could dampen housing demand in 2022.
"This year, consumers should prepare to endure some increases in mortgage rates," Yun cautioned. "I also expect home prices to grow more moderately by 3% to 5% in 2022, and then similarly in 2023 as more supply reaches the market."
Looking at the housing supply, the report said that inventory of homes for sale totaled 910,000 units, down 18.0% from November and down 14.2% from one year ago.
“We saw inventory numbers hit an all-time low in December," Yun said. "Home builders have already made strides in 2022 to increase supply, but reversing gaps like the ones we've seen recently will take years to correct."
Meanwhile, home prices continued to increase with the median existing-home price3 for all housing types in December rising to $358,000, up 15.8% from December 2020.
