The U.S. housing market could be showing early signs of stabilizing as sales activity of existing homes falls to its lowest level since June 2020.
Existing home sales declined by 2% last month to a seasonally adjusted and annualized rate of 3.96 million units, compared to August's annualized rate of 4.04 million homes, the National Association of Realtors (NAR) said on Thursday.
The housing market is seeing its weakest activity since the global economy ground to a halt because of the COVID-19 pandemic; however, despite the weakness, the data was actually slightly better than expected. Market consensus projections were calling for existing home sales to drop even lower to 3.86 million units.
For the year, home sales have dropped more than 15%, the NAR said in the report.
The gold market is not seeing much reaction to the latest disappointing housing market data. the precious metal continues to see some modest technical selling pressure. December gold futures last traded at $1.964.90 an ounce, down 0.19% on the day.
According to some economists, markets aren't sensitive to disappointing housing market data as this sector has been a drag on the economy through most of 2023. Some analysts have said that it could be even too early to look for a bottom in the market just yet as rising mortgage rates continue to price out many potential new home buyers. Wednesday, the average rate on U.S. 30-year fixed mortgages hit 8%, the highest level since mid-2000.
Along with rising mortgage rates, potential home buyers also face higher costs as the lack of supply in the market supports elevated home prices.
"As has been the case throughout this year, limited inventory and low housing affordability continue to hamper home sales," said NAR Chief Economist Lawrence Yun. "The Federal Reserve simply cannot keep raising interest rates in light of softening inflation and weakening job gains."
Looking at home prices, the NAR said that the median price of all existing home types last month was $394,300, up 2.8% compared to last year. All four regions in the U.S. saw price increases, the report said.
"For the third straight month, home prices are up from a year ago, confirming the pressing need for more housing supply," Yun said.
The supply of homes on the market as of the end of September was 1.13 million, up 2.7% from August but down 8% from last year. The inventory of homes for sale represents a 3.4-month supply.
Source Kitco
BDST: 1521 HRS, OCT 20, 2023
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