Gold prices largely ignore stagnant U.S. pending home sales data

NEW YORK (October 29) Hopes for a stabilizing U.S. housing market could be dashed after the number of potential home buyers stagnated last month, according to the latest data from the National Association of Realtors (NAR).

The U.S. pending home sales index was unchanged in September, down from August’s revised 4.2% increase, the NAR announced on Wednesday. The data came in weaker than expected, as economists had forecast a 1.6% rise.

The report noted that home sales are down 0.9% from a year ago.

"Contract signings matched the second-strongest pace of the year. However, signings have yet to fully reach the level needed for a healthy market, despite mortgage rates falling to a one-year low. A record-high stock market and growing housing wealth in September were not enough to offset a likely softening job market."

The gold market is not seeing much reaction to the disappointing housing data, as the precious metal experiences some bargain-hunting after a sharp drop below $4,000 at the start of the week. Spot gold last traded at $4,012.10 an ounce, up 1.5% on the day.

Economists pay close attention to pending home sales because the report serves as a leading indicator of existing home sales, given that contracts are signed a few months before the transactions are completed.

The U.S. housing market has been struggling to stabilize after significant weakness over the past two years. Many potential home buyers have been priced out due to rising home prices and high mortgage rates.

However, there are growing expectations that the Federal Reserve’s new easing cycle will push bond yields lower, helping to reduce mortgage rates.

KitcoNews