Gold price rally gains steam as U.S. new home sales drop 12.6% in July
(Kitco News) - Gold prices have pushed to session highs as the housing market, an important pillar of U.S. economic growth, continued to weaken as consumers bought fewer new homes than expected last month.
New home sales fell to a seasonally adjusted annualized rate of 511,000 homes in July, down 12.6%, the U.S. Commerce Department said on Tuesday. June's sales were revised down to a rate of 585,000 units.
According to consensus estimates, economists were looking for a sales pace of around 574,000 homes.
Analysts note that this is the worst sales pace since 2016. For the year, new home sales are down nearly 30%.
The gold market is seeing new safe-haven demand as recession fears reemerge in the marketplace following the disappointing sales data. December gold prices last traded at $1,765.70 an ounce, up roughly 1% on the day.
While the latest home sales data was weaker than expected, some economists note that the drop is not a major shock as momentum in the housing sector has slowed through most of 2022 as the Federal Reserve has aggressively tightened monetary policy.
Economists have said that rising mortgage rates due to higher interest rates and rising home prices have priced many new home buyers out of the market.
Looking at prices, the report said the median sales price of new houses sold last month was $439,400; the average sales price was $546,800.
For some economists, there are signs that the market is stabilizing as housing inventories pick up. The report said the supply of new homes for sale increased to 464,000, representing a 10.6-month supply at the current sales pace.