Ask any homebuyer these days about how their home search is going, and you are likely to hear a whole lot of frustration. The summer of 2025 turned out to be challenging not only for homebuyers, but home sellers and homebuilders. Call it a perfect storm for the U.S. housing market, and that in turn helped to boost gold.
In July, new home sales skidded 0.6% to a seasonally adjusted rate of 652,000, the Commerce Department said. Economists had forecast new home sales to climb.
Gold climbed to a 3-week high, boosted by the weaker housing news, concerns over Federal Reserve independence, and ongoing safe-haven buying amid geopolitical and economic uncertainty.
So, why has the housing market stalled? What does it mean for gold and for the U.S. economy? Let’s dig deeper.
Homebuyers: High Mortgage Rates, High Home Prices
First-time homebuyers face big challenges when it comes to signing on the dotted line and hiring movers to move into a new home. These include high mortgage rates and high home prices.
In June, the median price for a U.S. existing home soared to a record high of $435,300, according to the National Association of Realtors. That’s up 2% from a year ago and marked the 24th straight month of annual price increases. Add rising mortgage rates into the mix at around 6.70% and that means new homebuyers must pay above $1,200 per month more for a median-priced home than in 2022.
Sellers: Starting to Delist Instead of Lowering Prices
Frustrated home sellers are pushing back against price cuts, and that’s another factor resulting in the stalled housing market. The longer homes sit, the more likely sellers are to delist their homes for sale, Realtor.com said. The rise in delisting has also coincided with a slower pace of new listings.
Builders: Cautious amid Weak Demand and High Prices for Building Materials
It turns out there’s a national shortage of about 4 million homes. Yet, builders are cautious in the current environment, and new single-family construction has slowed. Building permits dropped 4.4% year-over-year in June. Builders point to high financing costs, weak buying demand, and rising prices on building construction materials as factors holding them back. Since 2022, single-family home starts are down 10% while new homes under construction are down 15%.
Big Picture: Home Buying is an Important Engine for U.S. Economic Growth
When the housing market slows, that has a spillover negative impact on the U.S. economy. After all, when you buy a new home, you often buy new furniture, appliances, and start to spend on things like landscaping and maintenance. This has a ripple effect throughout the economy, increasing demand for goods and services, which creates jobs and boosts economic growth.
A slowdown in the housing market has the opposite effect, and that’s what we are seeing now.
Why Gold Climbs on Signs of a Weaker Housing Market
As we saw in late August, when gold climbed to a 3-week high, precious metals benefit from weaker housing market data because it reveals broader economic stress, increased uncertainty about the labor market, and even concerns about a recession, which increases safe-haven demand for gold.
Economists remain sour on the outlook for the housing market ahead, which creates favorable conditions for gold to continue to climb. The worrisome housing data is only one of many reasons investors are piling into gold in 2025, with the precious metal soaring to a record high in the first half of the year. Gold is trading quietly now, but firms from Fidelity to Goldman Sachs and J.P. Morgan forecast a new leg higher with the price of gold expected to exceed $4,000 an ounce. That makes today a great time to consider increasing your allocation to precious metals. Get started with a complimentary portfolio review with a Blanchard portfolio manager today.
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