(Kitco News) - The U.S. housing sector continues to struggle as the construction of new homes falls to its lowest level in nine months.
The gold market is not seeing much reaction to the disappointing data, as the price manages to push above initial resistance at $2,350 an ounce.
Housing starts dropped 5.5% in May to a seasonally adjusted annual rate of 1.277 million units, the Commerce Department said on Thursday. The data came in lower than expected, as economists looked for a rate of 1.37 million units.
Meanwhile, the report said that housing construction compared to last year is down nearly 20%.
The gold market continues to consolidate as it pays little attention to economic data. August gold futures last traded at $2,350.50 an ounce, up 0.15% on the day.
At the same time, a further decline in building permits issued last month does not bode well for a sustained recovery in the housing market anytime soon. The report said that building permits for future homebuilding declined 3.8% to a rate of 1.386 million last month, compared to April’s revised estimate of 1.444 million permits.
The issuance of building permits is down 9.5% for the year.
Although the latest housing data continues to disappoint, it has not surprised many economists as the sector faces some significant headwinds.
The Federal Reserve’s aggressive monetary policy stance has kept mortgage rates elevated. At the same time, a lack of supply has pushed home prices higher, pricing many potential home buyers out of the marketplace.
Relief for the housing market could come after the summer as markets expect the U.S. central bank to cut rates in September.
