Spot gold traded at $3,322/oz after U.S. pending home sales surprise with 1.8% rise in May

(Kitco News) – Hopes for a stabilizing U.S. housing market were bolstered after the number of potential home buyers rose beyond expectations last month, according to the latest data from the National Association of Realtors (NAR).

The U.S. pending home sales index rose 1.8% in May, the NAR announced on Thursday. The data was significantly better than forecasts, as economists expected a -0.3% reading. April’s print was unrevised at -6.3%. All four U.S. regions experienced month-over-month increases in transactions.

For the year, pending home sales rose 1.1% against expectations for a -2.1% decrease, and following the unrevised -2.5% in April. Sales increased in the Midwest and South but decreased in the Northeast and West.

“Consistent job gains and rising wages are modestly helping the housing market,” said NAR Chief Economist Lawrence Yun. “Hourly wages are increasing faster than home prices. However, mortgage rate fluctuations are the primary driver of homebuying decisions and impact housing affordability more than wage gains.”

Spot gold fell to a session low of $3,310 per ounce a half hour before the release, but is staying off the low in the minutes following the housing data. It last traded at $3,322.21 per ounce for a loss of 0.31% on the day.

“The Northeast’s housing shortage is boosting home prices, with more than a quarter of homes selling above list price,” Yun added. “Conversely, more inventory in the South gives home buyers greater negotiation power. Price declines in the South should be considered temporary given the region’s strong job creation.”

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. Many potential home buyers have been priced out of the market due to rising prices and higher mortgage rates.