(Kitco News) - Hope of some stability in the U.S. housing market is quickly being dashed as the number of potential home buyers drops sharply in January, according to the latest data from the National Association of Realtors (NAR).
U.S. pending home sales Index dropped 4.9% in January to 74.3 the NAR said Thursday. The data was significantly weaker than expected as economists were expecting to see a 1.4% increase.
For the year, pending home sales are down 8.8%, the report said.
The disappointing housing market data is helping gold hold at session highs above $2,050 an ounce. April gold futures last traded at $2,059 an ounce, up 0.80% on the day.
Lawrence Yun, Chief Economist for the NAR, said remains optimistic that the housing market can recover as the economy remains healthy.
“The job market is solid, and the country's total wealth reached a record high due to stock market and home price gains," said Yun said in the report. "This combination of economic conditions is favorable for home buying. However, consumers are showing extra sensitivity to changes in mortgage rates in the current cycle, and that's impacting home sales."
Economists pay close attention to pending home sales because the report is a leading indicator of existing-home sales given that contracts are signed a few months before homes are actually sold.
The U.S. housing market has been trying to stabilize after seeing significant weakness through most of 2023. Many potential home buyers have been priced out of the market due to rising prices and higher mortgage rates.
The Federal Reserve’s stance to maintain its restrictive monetary policy through the first half of 2024 continues to support higher mortgage rates.
