(Kitco News) - Hopes for a stabilizing U.S. housing market were weakened after the number of potential home buyers fell beyond expectations last month, according to the latest data from the National Association of Realtors (NAR).
The U.S. pending home sales index fell -0.8% in January, the NAR announced on Thursday. The data was worse than forecasts, as economists expected a 1.3% rise. December’s print was revised up to -7.4% from -9.3%. Month-over-month pending home sales rose in the Midwest and West, but declined in the Northeast and South.
For the year, pending home sales fell -0.4% against expectations for a 2.4% increase and following the unrevised -3.0% drop in December. Year-over-year sales increased in the South and West, but declined in the Northeast and Midwest.
“Improving affordability conditions have yet to induce more buying activity,” said NAR Chief Economist Dr. Lawrence Yun. “With mortgage rates nearing 6%, an additional 5.5 million households that could not qualify for a mortgage one year ago would qualify at today’s lower rates. Most newly qualifying households do not act immediately, but based on past experience, about 10% could enter the market—potentially adding roughly 550,000 new homebuyers this year compared with last year.”
Spot gold broke back above $5,000 per ounce following the North American open, and it was holding above that level in the minutes following the housing data. It last traded at $5,006.09 per ounce for a gain of 0.58% on the day.
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 over the past two years, as many potential home buyers were priced out of the market due to rising prices and high mortgage rates.
