Stocks having record January - Stocks rallied to new highs again this week, as a number of companies reported higher than expected earnings. As well as posting solid fourth quarter earnings they provided optimistic guidance regarding their outlook for 2018. Companies included the tax savings under the recently passed tax reform, a stronger domestic and world economy, and increased consumer spending as factors for their higher outlooks. The Dow Jones Industrial Average closed the week at 26,616.71, up from last week’s close of 26.071.72. It's up 7.7% year to date. The S&P 500 closed the week at 2,872.77, up from 2,810.30 last week. It is up 7.5% year to date. The NASDAQ closed at 7,507.77, up from 7,336.38 last week. It is up 8.7% year to date.
Treasury Bond Yields - The 10 year treasury bond closed the week yielding 2.66% up just slightly from 2.64% last week. The 30-year treasury bond yield ended the week at 2.91%, unchanged from 2.91% last week. We watch bond rates because mortgage rates follow bond rates.
Mortgage rates higher this week - Although inflation has remained tame, rates have risen in recent weeks. Fixed rates follow corresponding bonds. For example the 30-year fixed follows 30-year bond yields. Usually, long term bonds follow inflation, but bonds also attract investors looking for lower risk. With stocks soaring many investors have moved money from low risk, low return bonds to stocks. Lower demand for bonds have driven yields up. If stocks begin to drop, and inflation remains tame, I'd expect rates to settle in a little lower. Rates are still near historic lows. The January 25, 2018 Freddie Mac Primary Mortgage Survey reported that the 30 year fixed mortgage rate average was 4.15% up from last week’s 4.04%. The 15 year fixed was 3.62%, up from 3.49% last week. The 5-year ARM was 3.52%, up from 3.46% last week.
2017 Gross Domestic Product - The Commerce Department reported its first estimate of the nation's fourth quarter GDP growth at 2.6%. Experts had forecasted growth at 3%, so this initial estimate was disappointing. The initial estimate is often revised. For the year, the nation's $17 trillion economy recovered from a slow start in the first quarter where GDP growth was just 1.4%; it grew to 3.1% in the second quarter, 3.2% in the third quarter, and ended the year at 2.6% in an initial estimate. Those quarterly rates are annualized, so if the initial estimate is not revised much the growth rate would be about 2.6% for the entire year.
Consumer spending higher in fourth quarter —Consumer spending, which is the biggest contributor to the economy, grew at a 3.8% pace, its fastest pace in more than a year. Growth was partly driven by the strongest holiday shopping season in several years, according to data from MasterCard SpendingPulse. Business spending on large equipment also added to growth.
California existing home sales, and prices increase in 2017 - -The California Association of Realtors reported that existing single-family home sales totaled 423,760 in 2017, up 1.4% from 2016 when 417,720 closed escrows were reported. The median (not average) price paid for a home in California was $549,560, up 7.6% for 2017. Housing inventory, which had been at historically low levels, dropped even further. The unsold inventory index revealed that there was just a 2.5 month supply of homes in the market in December, the lowest monthly reading in 13 years. The number of homes for sale in 2017 was 12% below that of 2016. Los Angeles County saw a higher increase in prices than the state as a whole, due to tighter inventory levels. The median price in Los Angeles County increased 10.6% in 2017, while the number of sales dropped 7.3%.
U.S. existing home sales highest in 11 years — The National Association of Realtors reported that the number of existing homes sold in 2017 increased 1.1% from 2016 to the highest level in 11 years. The median price was $246,800, a 5.8% increase from last December. Total housing inventory was 11.4% lower in December, compared to December 2016. There was a 3.2 month supply in December, down from a 3.6 month supply last December. It marked the lowest inventory level since NAR began tracking monthly inventory supply. Existing home sales include all sales of residential homes, condominiums, town-homes and co-ops reported to member associations throughout the country.
2017 New home sales highest in 10 years - The Commerce Department reported that although the number of new homes sold in the U.S. dropped in December, new home sales increased 8.3% in 2017. The number of new homes sold hit a 10 year high in 2017.
Economic and CA Real Estate Update for the Week Ending 11/17/17:
Stocks had another week of gains, and mortgage rates lower but end the week higher. Details:
2016 Year End Economic and Real Estate Update and My Predictions for 2017:
It was a great year for Real Estate, and it would have been much better had it not been for the limited inventory. Read more about it here:
Stocks up for the fourth straight week - Sparked by second quarter quarterly profits coming in above expectations, continued low interest rates, and better than expected economic reports,... Read More
Stocks suffer their worst day in 10 months following British vote to leave European Union - Stocks declined worldwide on Friday following results of British vote to leave the European Union... Read More
Economic Update For The Week Ending June 17, 2016
Stocks lower this week - Stock markets have dropped in the last 6 sessions. Investor's fears are over next Thursday's British referendum to leave the European Union. It is unknown what impact it will have if the referendum passes, but many investors feel it will harm the European economy and thus hurt corporate profits. Some believe that if the British break away from the European Union others will follow.
The Dow Jones Industrial Average closed the week at 17,675.16, down from 17,865.34 last Friday. The S&P 500 closed the week at 2,071.22, down from 2,096.07 last week. The NASDAQ closed the week at 4,800.34, down from last week's close of 4,895.55.
Bond yields remain near 3-year low – The 10-Year U.S. Treasury bond yield closed the week at 1.62%, down slightly from 1.64% last Friday. The 30-Year U.S. Treasury bond closed at 2.44%, also down from 2.44% last week. Mortgage rates follow bond rates so we watch bond rates carefully.
Mortgage rates at 3-year low ! - The Freddie Mac Primary Mortgage Survey released on June 16, 2016 showed that average mortgage rates from lenders surveyed, for the most popular mortgage products, were as follows: The 30-Year Fixed rate average was 3.54%. The 15-Year Fixed average rate was 2.81% The 5/1 ARM average rate was 2.74%. Bond yields dropped at the end of the week so rates could be even lower next week.
California's unemployment rate dips to 5.2% - The Employment Development Department reported that California employers added 15,200 net new jobs in May. While the number of new jobs added was below what analysts expected, the unemployment rate fell from 5.3% in April to 5.2% in May. The unemployment rate in May 2015 was 6.4%, so being at 5.2% is a 1.2% drop year over year!
Federal Reserve leaves rates unchanged in June - Amid worries of slowing job growth, The Federal Open Market Committee declined to raise its interest rate target from 0.5% at this week's two day meeting. Fed chairperson, Janet Yellen, signaled late last year that there could be as many as 6 increases in 2016. As the labor market growth has slowed and economic growth is no longer at last year's levels, Fed officials are signaling that there may only be one or two increases in 2016.
California existing home sales and prices up in May - The California Association of Realtors reported that existing home sales in California totaled 410,190 in May on a seasonally adjusted annual rate. That is up 0.6% from April and down 3.2% from last May. Tight inventory has impacted the number of sales, as there was just a 3.4 month supply of homes on the market in May, down from 3.5 months in April. A 6-7 month supply is considered normal.
The median price paid for a single family home in California rose to $518,760 in May from $509,590 in April.
Economic and Real Estate Update for the week ending June 10, 2016
Stocks hit 2016 highs on Wednesday and lost all the gains at the end the week !Stock market indexes hit their highest levels in 2016 on Wednesday, only to fall Thursday and Friday to end the week pretty much unchanged. The week started off with comments from Fed chairperson, Janet Yellen, which led investors to believe that an interest rate hike soon would no longer occur, given last Friday's weak jobs growth report.
This was good news to investors, as higher interest rates increase borrowing costs which reduce profit. On Thursday, the Labor Department reported that jobless claims dropped by 4,000 for the week, suggesting that the labor market was stronger than last week's report implied. On Wednesday, oil hit the highest price per barrel since last July, toping $51 a barrel after bottoming out in February at $27 a barrel. This helped stocks, as rising oil prices helps energy stocks and economies in oil producing areas where low prices have led to cuts in production. The number of new rigs increased for the second straight week.
Unfortunately, on Thursday and Friday oil prices dropped back down to about $49 a barrel. Stocks retreated, losing all the gains for the week. The Dow Jones Industrial Average closed the week at 17,865.34, up from 17,807.06 last Friday. The S&P 500 closed the week at 2,096.07, unchanged from 2,099.13 last week. The NASDAQ closed the week at 4,895.55, down from last week's close of 4,942.52.
Bond yields drop – The 10-Year U.S. Treasury bond yield closed the week at 1.64%, down significantly from 1.85% on May 31. The 30-Year U.S. Treasury bond closed at 2.44%, also down from 2.63% at the end of May. Mortgage rates follow bond rates so we watch bond rates carefully.
Mortgage rates drop to 3-year low - The Freddie Mac Primary Mortgage Survey released on June 9, 2016 showed that average mortgage rates from lenders surveyed for the most popular mortgage products were as follows: The 30-Year Fixed rate average was 3.60%. The 15-Year Fixed average rate was 2.87%. The 5/1 ARM average rate was 2.82%. Bond yields dropped at the end of the week so rates could be even lower next week.
Economic and Real Estate Update for the week ending May 20, 2016
Stocks were mixed this past week - Stocks climbed Monday, only to be pulled back after The Federal Reserve released minutes from the April meeting suggesting a possible interest rate hike as early as their June meeting. The Dow Jones Industrial Average closed the week at 17,500.94, down from 17,535.32 last week. The S&P 500 closed the week at 2,052.32, up slightly from 2,046.41 last week. The NASDAQ closed Friday at 4,769.56, up from 4,717.68 last week.
Bond yields rose after Fed minutes suggested a rate hike possible in June - The 10-Year U.S. Treasury bond closed Friday yielding 1.85%, up sharply from 1.71% last week. The 30-Year U.S. Treasury bond closed Friday yielding 2.63%, also up from 2.55% last week. Mortgage rates follow bond yields so we watch bonds carefully.
Mortgage rates inch up from 3-year low—The Freddie Mac Primary Mortgage Survey released on May 19, 2016 showed that average mortgage rates from lenders surveyed for the most popular mortgage products were as follows: The 30-Year Fixed rate average was 3.55% The 15-Year Fixed average rate was 2.81%. The 5/1 ARM average rate was 2.80%.
California state-wide median price breaks $500,000 - The California Association of Realtors reported that the median price of a home in California rose to $509,100 in April. That represents a 5.3% month-over-month increase from March.
California homes re-sales are fewer due to tight inventory - The California Association of Realtors also reported that the number of homes sold in April dropped 2.6% from its annualized level in March. Year-over-year the number of sales declined 5.4% from April 2015. The Unsold Inventory Index dropped again to a 3.5 month supply in April. A normal market is a 6.1 month supply, so inventory levels are around 60% of normal, according to CAR. This tight inventory is pushing prices higher and sales lower as buyers are again finding it tough to find homes to buy.
Economic and Real Estate Update for the week ending May 13, 2016
Stocks drop again this week - Stocks dropped again this week as a new round of first quarter corporate earnings reports showed consumers pulled back sharply on purchases. Retail sales were particularly weak, as companies revised their outlooks downward for the remainder of the year. Late Friday the Commerce Department released April retail sales figures, which showed that sales rebounded. It will be interesting to see how this affects the opening of the market on Monday. The Dow Jones Industrial Average closed the week at 17,535.32, down from 17,740.63 last week. The S&P 500 closed the week at 2,046.61, down from 2,057.41 last week. The NASDAQ closed Friday at 4,717.68, down from 4,736.16 last week.
Bond yields lower again this week - The 10-Year U.S. Treasury bond closed Friday yielding 1.71%, down from 1.79% last week. The 30-Year U.S. Treasury bond closed Friday yielding 2.55%, also lower than 2.62% last week. Mortgage rates follow bond yields so we watch bonds carefully.
Mortgage rates drop to 3 year low - The Freddie Mac Primary Mortgage Survey released on May 12, 2016 showed that average mortgage rates from lenders surveyed for the most popular mortgage products were as follows: The 30-Year-Fixed rate average was 3.57%. The 15-Year-Fixed average rate was 2.81%. The 5/1 ARM average rate was 2.78%.
Retail sales surged in April - The Commerce Department reported that U.S. retail sales recorded their biggest increase in a year as consumers stepped up purchases of automobiles and other goods in April. This report suggested that the economy may be gaining momentum after a disappointing first quarter. Retail sales surged 1.3% in April, its largest gain since March 2015. Coming just days after Macy's and Nordstrom's reported poor first quarter sales, this report suggests that fear of that consumer spending slowing sharply may have been over-exaggerated.
Homes more affordable in the first quarter - The California Association of Realtors reported that housing affordability in the state improved in the first quarter. Strong wage growth, lower interest rates, and leveling home prices pushes housing affordability higher. According to C.A.R., 34% of California households could afford to purchase a $465,280 median-priced home. The income required to purchase a median priced home was $92,571. This was up from the fourth quarter of 2015 when only 30% of households could afford to purchase a median-priced home. Condos and town-homes were even more affordable, with 41% of households able to afford a condo or town-home. The income needed to purchase the median-priced condo or town-home was $77,575.