The recent downtrend in the US housing market, marked by a staggering drop in existing home sales, has failed to significantly impact the gold market, as the precious metal continues to experience only modest technical selling pressure. Data released by the National Association of Realtors (NAR) revealed that existing home sales fell by 2% last month, reaching the lowest level since June 2020, underscoring the persistent challenges faced by the housing sector.
Despite the decline, the figures were marginally better than anticipated, with market projections originally forecasting an even steeper drop to 3.86 million units. However, the housing market has endured a tumultuous year, grappling with a steady downturn that has culminated in a staggering 15% decline in home sales for the year, according to the NAR’s report.
While rising mortgage rates have posed a significant obstacle, driving potential homebuyers out of the market, the shortage of housing supply has also contributed to elevated home prices, exacerbating the challenges faced by prospective buyers. The average rate on US 30-year fixed mortgages surged to 8%, reaching its highest level since mid-2000, further dampening the prospects for new homebuyers.
NAR Chief Economist Lawrence Yun emphasized that limited inventory and reduced housing affordability have continued to constrain home sales, advocating for a need for policy measures to address the pressing issue of housing supply. With the median price of all existing home types rising to $394,300, indicating a 2.8% increase compared to the previous year, the report highlighted the urgent necessity for a more substantial housing supply to stabilize the market.
Despite the concerning data from the housing sector, the gold market has not exhibited any significant response, with December gold futures trading at $1,964.90 an ounce, representing a marginal 0.19% dip for the day. Economists and analysts suggest that the market’s lack of sensitivity to the housing data may stem from the sector’s persistently sluggish performance throughout 2023, accentuated by the current challenges of rising mortgage rates and limited housing supply.