U.S. new home sales surge in August, gold price trims early-morning gains

(Kitco News) Gold edged down as the U.S. new home sales came in above expectations in August with a jump of 28.8%. The prior month’s number was revised up but still marked a drop in sales.

New home sales were at a seasonally adjusted annualized rate of 685,000 homes in August, the U.S. Commerce Department said on Tuesday. July’s sales were revised up to a rate of 532,000 units.

The market consensus called for sales to drop to 500,000 units in July.

On an annual basis, new home sales were down 0.1% from last year’s estimate of 686,000 units.

Looking at home prices, the report said that the median sales price for homes sold last month was $436,800, while the average price was $521,800.

As of the end of August, the inventory of houses for sale was at 461,000, representing a 8.1-month supply at the current sales rate.

Analysts were surprised by the jump in new home sales in August, but with higher mortgage rates on their way, they don't see this strength lasting.

"[August] sales [were] at the fastest pace seen since March, at 685K (vs. 500K consensus). However, we don't expect the strength to persist given the climb in mortgage rates into September," said CIBC Capital Markets senior economist Katherine Judge.

Gold ticked down slightly following the release of the data, with December Comex gold futures still trading well in the green after Monday’s drop. December gold was last at $1,642.20, up 0.54% on the day.