(Kitco News) - The U.S. housing sector continues to struggle under the weight of the Federal Reserve's aggressive monetary policy actions as new home construction weakened more than expected at the start of the year.
Thursday, the Commerce Department said that housing starts dropped to 1.309 million units in January, down 4.5% from December's revised estimate of 1.371 million units.
The report added that for the year, housing starts are down 21.4% compared to January 2022.
The gold market is not seeing much reaction to the disappointing housing construction data. Spot gold prices on Kitco.com last traded at $1,836 an ounce, roughly unchanged on the day.
Future growth in the U.S. housing market remains relatively lukewarm as construction permits rise in line with expectations. The report said building permits last month rose to 1.339 million, up 0.1% from December's revised rate of 1.337 permits.
For the year, permits are down 27.3%, the report added.
The housing market, an important pillar of support for the U.S. economy, struggled through most of 2022. Further weakness is expected this year. The sector is being hit on two fronts, keeping many potential home buyers out of the market.
The Federal Reserve has raised interest rates by 450 basis points in this current tightening cycle, its most aggressive pace in 40 years. The sharp rise in interest rates has pushed mortgage rates higher.
At the same time, a lack of inventory in the housing market has kept home prices elevated through 2022, which has further priced new home buyers out of the marketplace.
