Gold Prices Bounce After Disappointing Pending Home Sales Data
(Kitco News)- Gold priceshave bounced of a five-week low following data showing further weakness in thehousing sector as fewer consumers than expected committed to buying a home inMarch, accordingto the latest data from the National Association of Realtors (NAR).
Monday,the association said that its pending home sales index rose only 0.4% in Marchto a reading of 107.6, compared to February's downwardly revised level of 107.2.The increase was weaker than expected as economists were expecting to see a0.6% rise.
Whilethe monthly data was relatively unchanged, pending home sales are down sharplyfrom the previous year. The index is down 3% from March 2016; this is the third consecutivemonth of annual declines.
While stillnegative on the day, the gold market has bounced off its session lows ininitial reaction to the data. June gold futures last traded at $1,316.20 anounce, down 0.54% on the day.
Accordingto LawrenceYun, NAR chief economist, the housing salesare dropping because a lack of supply is driving home prices higher.
“"Steady price growth and the swift pace listings arecoming off the market are proof that more supply is needed to fully satisfydemand1. What continues to hold back sales is the fact thatprospective buyers are increasingly having difficulty finding an affordablehome to buy,” he said in the press release.
"Much of the country is enjoying a thriving job market,but buying a home is becoming more expensive," Yun added. "That iswhy it is an absolute necessity for there to be a large increase in new andexisting homes available for sale in coming months to moderate home pricegrowth. Otherwise, sales will remain stuck in this holding pattern and agrowing share of would-be buyers - especially first-time buyers - will be lefton the sidelines."
Economistsclosely watch the pending home sales numbers because the index is seen as abarometer for the housing market. A lag of a month or two usually existsbetween a contract and a completed sale.
By Neils ChristensenFor Kitco News
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