U.S. existing home sales in September fell by 1% month-on-month and 3.5% year-on-year to 3.84 million units, near a 14-year low, according to data released by the National Association of Realtors (NAR).

Read more at Datatrack

The existing home inventory increased by 1.5% in September to 1.39 million units, representing a 23% rise compared to last year’s 1.13 million units. The months of supply climbed to 4.3 months, up 0.1 from August.

Read more at Datatrack

The median price for existing homes was $404,500 in September, up 3.0% year-on-year and a slight 0.5% increase from the previous period.

Read more at Datatrack

“factors usually associated with higher home sales are developing,” said NAR Chief Economist Lawrence Yun. “There are more inventory choices for consumers, lower mortgage rates than a year ago and continued job additions to the economy. Perhaps, some consumers are hesitating about moving forward with a major expenditure like purchasing a home before the upcoming election.”

High Interest Rates Continue to Restrain Real Estate Market Activity…

In the past two years, annualized existing home sales have typically ranged from 4 million to 4.5 million units. One major reason is that many homeowners are unwilling to sell properties they bought at lower interest rates during the pandemic.

While the Federal Reserve cut interest rates by 50 basis points in September due to concerns over the labor market, bringing mortgage rates down to a near two-year low, recent improvements in labor market data may lead the Fed to take a more gradual approach to future rate cuts. This may cause mortgage rates to increase again in October, which could further suppress existing home sales.

(Source: MCC, TrendForce)

Given the high home prices and limited supply, many prospective buyers are likely to wait for further rate decreases, indicating that the existing home sales market could remain sluggish for some time.

China’s youth unemployment rate decreased in September, according to data released by China’s National Bureau of Statistics on October 22. The unemployment rate for 16-24 year-olds, excluding students, stood at 17.6%, down from 18.8% in the previous month, but it remains at a relatively high level.

Read more at Datatrack

It is worth noting that after the youth unemployment rate for the 16-24 age group reached a historic high in June 2023, Chinese authorities temporarily halted the release of this data and revised the statistical method to exclude students. However, this adjustment has raised concerns in the market regarding the credibility of the data.

Before the release of this unemployment figure, the National Bureau of Statistics reported that the economy grew by 4.6% in the third quarter, slightly higher than market expectations but marking the lowest growth rate in the past six months.

Read more at Datatrack

Amid a prolonged period of economic weakness, the Chinese government finally introduced a significant and detailed monetary easing policy in September, followed by policies in October aimed at boosting economic growth and stabilizing the real estate market. The market is now closely watching to see if these policies will effectively revive the Chinese economy.

According to the International Monetary Fund’s (IMF) October report, global economic growth is expected to reach 3.2% in both 2024 and 2025, with the 2025 forecast being revised down by 0.1 percentage points compared to the July forecast.

United States

Breaking it down by major economies, the U.S. economy is projected to grow by 2.8% in 2024, an upward revision of 0.2 percentage points from the July estimate, driven by strong consumption and non-residential investment. In 2025, as fiscal policy tightens and the labor market cools, leading to weaker consumption, growth is expected to slow to 2.2%, though this remains 0.3 percentage points higher than the July forecast.

Euro area

In the euro area, economic growth is expected to slightly rebound to 0.8% in 2024 due to improved exports. In 2025, growth is forecast to rise further to 1.2%, driven by real wage increases and gradually easing policies. However, these forecasts have been revised down by 0.1 and 0.3 percentage points, respectively, compared to the July estimates, primarily reflecting weakness in Italy and Germany’s manufacturing sectors.

China

In Asia, China’s economic growth is forecast to slow to 4.8% in 2024, down 0.2 percentage points from the July forecast, due to weaker consumer demand amid real estate sector challenges. However, strong export performance is offering some support. For 2025, China’s growth is expected to slow further to 4.5%, in line with the July forecast.

Japan

Japan’s economy is expected to grow by 0.3% in 2024, a downward revision of 0.4 percentage points compared to the July forecast, reflecting supply chain disruptions caused by data falsification in the automotive sector. However, with rising real wages expected to drive consumption, growth is forecast to rebound to 1.1% in 2025, an upward revision of 0.1 percentage points from the July forecast.

The IMF also noted that downside risks to the global economic outlook are more pronounced compared to the July report. These risks include the possibility of tighter-than-expected monetary policies, increased financial market volatility, rising commodity prices due to geopolitical tensions, a deeper downturn in China’s real estate sector, and an increase in trade protectionism.

(Source: IMF, TrendForce)

Following the Federal Reserve cut rate by 50 basis points in September, the November monetary policy decision is approaching, and Federal Reserve officials will enter a blackout period after October 26. Below is a summary of key remarks from Fed officials following the September monetary policy meeting regarding future monetary policy:

Mary Daly: “I haven’t seen any information that would suggest we wouldn’t continue to reduce the interest rate consistent with achieving that durable expansion.” “This is a very tight interest rate for an economy that already is on the path to 2% inflation, and I don’t want to see the labor market slow further.”

Christopher Waller: “This data is signaling that the economy may not be slowing as much as desired. While we do not want to overreact to this data or look through it, I view the totality of the data as saying monetary policy should proceed with more caution on the pace of rate cuts than was needed at the September meeting.”  “Whatever happens in the near term, my baseline still calls for reducing the policy rate gradually over the next year.”

Jeffrey Schmid: “Absent any major shocks, I am optimistic that we can achieve such a cycle, but I believe it will take a cautious and gradual approach to policy. While I support dialing back the restrictiveness of policy, my preference would be to avoid outsized moves, especially given uncertainty over the eventual destination of policy and my desire to avoid contributing to financial market volatility.”

Neel Kashkari: “Right now I am forecasting some more modest cuts over the next several quarters to get to something around neutral, but it’s going to depend on the data.”

Overall, the comments from Fed officials reflect a cautious yet accommodative stance toward future monetary policy. While some officials emphasize the importance of continued rate cuts to support economic growth, there is also a clear focus on closely monitoring data and maintaining flexibility in response to economic developments. The path ahead for monetary policy seems to favor a gradual and measured approach, with a strong emphasis on avoiding excessive market volatility and ensuring the economy remains on a sustainable growth trajectory.

Read more at Datatrack

On October 21, gold futures on the New York Mercantile Exchange closed at $2,734.50, continuing to reach new all-time highs.

As one of the world’s primary safe-haven assets, gold has risen by over 30% so far this year. This increase mainly reflects the fact that major global economies have entered an interest rate-cutting cycle due to weakened economic outlooks. In addition, rising tensions in the Middle East and uncertainty surrounding the U.S. election have further driven gold prices upward.

Read more at Datatrack

Interest rates are a key factor in the pricing of all assets, but they are especially important for gold, as it does not provide interest or dividend income. As a result, gold’s price is highly sensitive to interest rate fluctuations.

The real interest rate (nominal interest rate minus inflation) is the key factor influencing gold prices. Typically, when real interest rates rise, gold’s attractiveness decreases relative to higher-yielding assets, leading to a drop in its price. Conversely, when real interest rates fall or turn negative, gold’s appeal as a safe-haven asset increases, pushing its price higher.

According to economic forecasts from major central banks, global interest rates are expected to decrease by 75 to 125 basis points by 2025. Therefore, the upward trend in gold prices is likely to continue through 2025.

(Source: Fed, ECB, BOE, RBA, S&P Global, TrendForce)