Gold price loses early gains as U.S. pending home sales surprise on the upside in May

(Kitco News) Gold pared back all of its early-morning gains as the U.S. pending home sales beat expectations in May.

The U.S. pending home sales were up 0.7% in May following April’s downwardly revised drop of 4%, the National Association of Realtors (NAR) said on Monday. The consensus forecast called for a decline of 3.7%. 

On an annual basis, pending home sales were down 13.6% from May 2021.

The pending home sales index was at 99.9 in May after registering 99.2 in the previous month. "An index of 100 is equal to the level of contract activity in 2001," according to the report.

Despite the uptick, the U.S. housing market is in the midst of a transition due to higher mortgage rates that are hurting consumers, said NAR chief economist Lawrence Yun.

"Contract signings are down sizably from a year ago because of much higher mortgage rates," Yun said. "Trying to balance the housing market by choking off demand via higher mortgage rates is damaging to consumers and the economy. The better way to balance the market is through increased supply, which also helps the broader economy."

The report stated that the monthly mortgage payment for the median single-family home price with a 10% down payment had risen by $800 since the start of 2022.

The biggest monthly increase was in the Northeast, with pending sales accelerating 15.4% in May. Meanwhile, the largest decline was observed in the West region, where homes are the most expensive, according to Yun.

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.

Following the data release, gold lost all early-morning gains and traded at fresh daily lows. August Comex gold futures were last at $1,827.50, down 0.15% on the day.