Gold price back below $1,900 as U.S. pending home sales beat expectations in August

Editor’s Note: Get caught up in minutes with our speedy summary of today’s must-read news stories and expert opinions that moved the precious metals and financial markets. Sign up here!

(Kitco News) Gold is back below $1,900 an ounce and near daily lows after the U.S. pending home sales beat expectations in August, showing that more consumers committed to buying a home.

The U.S. pending home sales were up 8.8% in August, the National Association of Realtors (NAR) said on Wednesday. Consensus forecasts were calling for an increase of 3.2%.

The pending home sales index came in at 132.8 in August, marking a new record high. July’s reading was 122.1. 

Also, pending home sales were up 24.2% from a year ago as low mortgage rates are driving demand.

“Tremendously low mortgage rates – below 3% – have again helped pending home sales climb in August,” said NAR’s chief economist Lawrence Yun. “Additionally, the Fed intends to hold short-term fed funds rates near 0% for the foreseeable future, which should in the absence of inflationary pressure keep mortgage rates low, and that will undoubtably aid homebuyers continuing to enter the marketplace … I am pleasantly surprised to see the industry bounce back so strongly and so quickly.”

Yun also warned that without matching supply the recovery in the housing market will not be sustainable. 

“Home prices are heating up fast,” he said. “The low mortgage rates are allowing buyers to secure cheaper mortgages, but many may find it harder to make the required down payment.”

Economists pay close attention to the pending home sales numbers because the index is seen as a forward-looking barometer for the housing market. A lag of a month or two usually exists between a contract and a completed sale.

Gold prices were back in the negative territory as the report came out. December Comex gold futures were last trading at $1,891.60, down 0.61% on the day. 

Yun also warned that without matching supply the recovery in the housing market will not be sustainable.

“Home prices are heating up fast,” he said. “The low mortgage rates are allowing buyers to secure cheaper mortgages, but many may find it harder to make the required down payment.”

Economists pay close attention to the pending home sales numbers because the index is seen as a forward-looking barometer for the housing market. A lag of a month or two usually exists between a contract and a completed sale.

Gold prices were back in the negative territory as the report came out. December Comex gold futures were last trading at $1,891.60, down 0.61% on the day.