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Gold prices trying to hold its ground as U.S. existing home sales fall 0.7% in January
(Kitco News) - Continued weakness in the U.S. housing market is not having much impact on the gold market as better-than-expected economic data helps to relieve some recession fears.
Existing home sales fell 0.7% last month to a seasonally adjusted and annualized rate of 4.00 million units, compared to December's annualized rate of 4.02 million homes, the National Association of Realtors (NAR) said on Tuesday. The latest housing market data was weaker than expected, as economists were looking for a sales rate of 4.09 million homes.
The report said this is the twelfth consecutive month of declining home sales, adding that existing home sales are down 36.9% compared to January 2022.
The gold market is trying to hold its ground in neutral territory at around $1,850 an ounce as investors continue to react to mixed economic data. April gold futures last traded at $1,847.40 an ounce, down 0.16% on the day.
The gold market saw some selling pressure a few minutes ahead of the housing market data as investors reacted to better-than-expected activity in both the U.S. service and manufacturing sectors.
Although the housing sector has seen substantial declines in the last 12 months, NAR chief economist Lawrence Yun said there are signs the market could be bottoming out.
"Home sales are bottoming out," he said in the report. "Prices vary depending on a market's affordability, with lower-priced regions witnessing modest growth and more expensive regions experiencing declines."
The U.S. housing market has struggled through most of 2022 as potential new home buyers faced a perfect storm of rising mortgage rates and elevated home prices. Last year the Federal Reserve raised interest rates by 425 basis points. The central bank remains in its most aggressive tightening cycle in the last 40 years.
At the same time, a lack of homes on the market has kept prices elevated.
The NAR said that the supply of homes for sale continues to improve. The inventory of homes for sale last month was 980,000, representing a 2.9-month supply. The number of homes for sale increased by 2.1% from December and 15.3% from January 2022, the report said.
"Inventory remains low, but buyers are beginning to have better negotiating power," Yun said. "Homes sitting on the market for more than 60 days can be purchased for around 10% less than the original list price."
Looking at home prices, the NAR said that the median price for all housing types last month was $359,000, up 1.3% from last year.
"This marks 131 consecutive months of year-over-year increases, the longest-running streak on record," the report said.
