(Kitco News) - Hopes for a stabilizing U.S. housing market were given a boost after the number of potential home buyers improved in August, according to the latest data from the National Association of Realtors (NAR).
The U.S. pending home sales index rose 0.6% in August, the NAR announced on Thursday, following a 5.5% decline in July. The data was better than forecasts, as economists expected only a 0.3% increase. The Midwest, South and West posted monthly gains in transactions, while the Northeast recorded another loss.
For the year, pending home sales fell 3.0% against expectations for a 6.0% decrease, and after a staggering -8.5 print in July. Year-over-year, the West registered growth, but the Northeast, Midwest and South declined.
“A slight upward turn reflects a modest improvement in housing affordability, primarily because mortgage rates descended to 6.5% in August,” said NAR Chief Economist Lawrence Yun. “However, contract signings remain near cyclical lows even as home prices keep marching to new record highs.”
Spot gold fell to a fresh session low of $2,654.84 per ounce in the minutes before the housing data was released, but it has since staged a modest recovery, last trading at $2,666.49 per ounce for a gain of 0.37% on the day.
“The Federal Reserve does not directly control mortgage rates, but the anticipation of more short-term interest rate cuts has pushed long-term mortgage rates down to near 6% in late September,” Yun added. “On a typical $300,000 mortgage, that translates to approximately $300 per month in mortgage payment savings compared to a few months ago.”
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 and early 2024. Many potential home buyers have been priced out of the market due to rising prices and higher mortgage rates.
