U.S. housing starts surged 19% in June to a seasonally adjusted annual rate of 1.47 million units, rebounding from May's six-year low of 1.20 million units, the Commerce Department announced on Friday. The recovery exceeded economists' forecasts of 1.31 million units, yet gold prices remained trapped below $4,000 an ounce at $3,966.60, down 0.22%, as the precious metal failed to attract safe-haven demand. Persistent inflation has prompted the Federal Reserve to adopt a tightening bias, with markets expecting at least one interest rate hike before year-end, pressuring the housing sector which accounts for roughly 16% of U.S. gross domestic product.
Housing Starts Jump 19% in June After Six-Year Low
Construction activity recovered significantly in June after falling to a six-year low in May. Housing starts jumped 19% last month to a seasonally adjusted annual rate of 1.47 million units, up from May's revised annual rate of 1.20 million units, the Commerce Department announced on Friday. The data was significantly better than expected, as economists had forecast a more modest recovery to 1.31 million units. Housing starts are up 3.5% compared to the same period last year, the report said.
Building Permits Fall 3% Despite Construction Recovery
Building permits for future homebuilding fell 3% to 1.37 million units last month, which was weaker than expected. According to consensus estimates, economists had forecast permit issuance to remain relatively stable. The number of building permits issued has fallen 2.4% compared to the same period last year. Permit data serves as a leading indicator, suggesting that the recovery in construction activity could be limited later this year.
Gold Trades at $3,966.60 as Safe-Haven Demand Remains Weak
The gold market is seeing little reaction to the latest economic data as selling pressure continues after prices failed to hold support at $4,000 on Thursday. Spot gold last traded at $3,966.60 an ounce, down 0.22% on the day. Gold prices remain trapped below $4,000 an ounce and have been unable to attract any significant safe-haven demand despite persistent uncertainty in the U.S. housing sector.
Federal Reserve Expected to Raise Rates Amid Inflation Concerns
The U.S. housing market accounts for roughly 16% of the nation's gross domestic product; however, the sector has been struggling due to rising home prices and elevated mortgage rates. Economists expect the housing market to remain under pressure as persistent inflation has prompted the Federal Reserve to adopt a tightening bias and prioritize price stability. Markets are expecting the U.S. central bank to raise interest rates at least once before the end of the year. At the same time, subdued construction activity is limiting the inventory of homes available for sale, helping to keep home prices near record highs.
FAQ
What were U.S. housing starts in June?
U.S. housing starts rose 19% in June to a seasonally adjusted annual rate of 1.47 million units, up from May's revised rate of 1.20 million units, according to the Commerce Department.
Why is gold trading below $4,000 an ounce?
Gold prices remain under pressure at $3,966.60 an ounce, down 0.22%, as the precious metal failed to hold support at $4,000 on Thursday and has been unable to attract safe-haven demand despite uncertainty in the U.S. housing sector.
What is the Federal Reserve expected to do with interest rates?
Markets are expecting the U.S. central bank to raise interest rates at least once before the end of the year due to persistent inflation, which has prompted the Federal Reserve to adopt a tightening bias and prioritize price stability.
