Gold prices are holding support above $1,800 an ounce as U.S. pending home sales fall 4% in November
(Kitco News) - Rising U.S. mortgage rates, due to the Federal Reserve’s aggressive monetary policy stance continues to take its toll on the U.S. housing sector as fewer consumers start the process of buying a new home in November.
The U.S. pending home sales fell 4% in last month following a drop of 4.6% in October, the National Association of Realtors (NAR) said on Wednesday. The data was weaker than expected as consensus forecast called for a decline of around 1%.
The gold market has seen technical selling pressure Wednesday and has not been able to attract any bullish traction following the disappointing home sales data. February gold futures last traded at $1,812.20 an ounce, down 0.60% on the day.
This is the sixth consecutive month of falling pending home sales. The report noted that the index has fallen to second lowest monthly reading in 20 years.
However, the association added that it hopes sales will pick up as 2022 comes to a close.
“With mortgage rates falling throughout December, home-buying activity should inevitably rebound in the coming months and help economic growth,” the report said.
Economists pay close attention to the pending home sales numbers because the index is seen as a forward-looking barometer for the housing market. A lag of a month or two usually exists between a contract and a completed sale.
The U.S. housing sector, which is a significant contributor to GDP growth, has been hard hit this past year as the Federal Reserve has raised interest rates by 425 basis points, its most aggressive monetary policy stance in 40 years.
Along with rising mortgage rates, rising home prices due to a lack of supply has also priced many potential new home owners out of the market.
Although the Federal Reserve is expected to continue to raise interest rates in 2023, many economists see the tightening cycle closer to peak rates. A light at the end of the tunnel could ease some pressure in the housing market, according to economists.