Gold prices largely ignore 0.8% increase in U.S. pending home sales
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(Kitco News) - Gold prices remain in a solid uptrend above $1,950 an ounce and are not seeing any significant selling pressure following an increase in consumers who started the process of buying a new home.
The U.S. pending home sales index rose 0.8%, to 83.2 in February following January's jump of 8.1%, the National Association of Realtors (NAR) said Wednesday. The data was better than expected; according to consensus forecasts, economists expected a 2.9% drop in pending home sales transactions.
This is the third consecutive month the leading housing market report beat economists' expectations.
However, the report noted a sharp drop compared to last year, with the index falling 21.1% compared to February 2022.
The gold market is largely ignoring the latest housing market data as the market consolidates at an elevated level above $1,950 an ounce. April gold futures last traded at $1,966 an ounce, down 0.37% on the day.
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.
NAR Chief Economist Lawrence Yun said the data points to a bottoming process building within the housing sector.
"After nearly a year, the housing sector's contraction is coming to an end," said NAR Chief Economist Lawrence Yun. "Existing-home sales, pending contracts and new-home construction pending contracts have turned the corner and climbed for the past three months.
"Mortgage rates have improved in recent weeks after the federal government guaranteed the status of most mortgages amidst uncertainty in the financial market," Yun added. "While access to commercial mortgage loans could become increasingly difficult, residential mortgage loans are expected to be more readily available.
After a difficult 2022 for the U.S. housing market, some analysts have said that they expect to see an improvement this year as the Federal Reserve end’s its aggressive monetary policy and potentially cuts rates as early as June, according to market expectations.
Helping the housing market has been the sharp drop in 10-year yields, which impacts mortgage rates. The 10-year yield is trading around 3.58%, down from 4% seen last month.