Economic update for the week ending December 15, 2018

New York Stock Exchange

Stocks ended the week down 

Signs of a slowing economy in Asia and Europe wiped out gains earlier in the week as stocks fell 2% on Friday. Earlier in the week it looked like stocks would end the week higher as investors  felt more optimistic that a trade deal would be worked out with China after President Trump tweeted that progress has been made, and talks with China have been productive. An inflation report showed inflation in check which lowers the risk of higher interest rates. Unfortunately, Friday’s repots that showed weakness in Asia and Europe wiped out the earlier weekly gains, and stocks had another losing week. The Dow Jones Industrial Average closed the week at 24,100.51, down from 24,338.94 last week. It was down 1.2% for the week and is now down 2.5% year-to-date.  The S&P 500 closed the week at 2,599.95, down  from 2,633.08 last week. It was down 1.3% for the week and is down 2.8% year-to-date. The NASDAQ closed the week at 6,910.77, down from 6,969.25 last week.   It was down 08% for the week and down 0.1%  year-to –date. 

Treasury Bond Yields unchanged 

The 10-year treasury bond closed the week yielding 2.89%, up slightly from 2.85%  last week. The 30-year treasury bond yield ended the week at 3.14%, unchanged from 3.14% last week. We watch treasury bond yields because mortgage rates follow bond yields. 

Mortgage rates dropped to the lowest level in three months 

The December 13, 2018 Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 4.63%, down from 4.75% last week. The 15-year fixed was 4.07%, down from 4.21%  last week. The 5-year ARM was 4.04%, down from 4.07% last week. Rates ended the week even lower. 

Economic update for the month ending October 31, 2018

U.S. Employers added 250,000 new jobs in October:

Wages grow at fastest pace in almost 10 years – Unemployment remains at lowest rate since 1969 – The Department of Labor Statistics reported Friday that 250,000 new jobs were added in October. That eclipsed the 190,000 new jobs analysts had expected. Job growth has now hit a record of 97 straight months. The unemployment rate was unchanged at 3.7%, the lowest national unemployment rate in 49 years. Average hourly wages were up 3.1% in October from last October. That was the largest year over gain in almost 10 years. 


California employers added 13,200 new jobs in September :

The California Employment Development Department reported that 13,200 new jobs were added in September. California has now added an average of 29,400 new jobs a month for 103 consecutive months. The state’s unemployment rate dropped to 4.1%, the lowest rate on record. 


U.S. stocks saw their largest monthly loss in 10 years in October:

 Although most companies reported quarterly profits that beat or were in line with expectations, the few like Amazon, Square, Hasbro, Domingo’s  and others  that reported disappointing results scared investors. The Dow Jones Industrial Average closed the month at 25,115.76, down from 26,458.31. last month. The S&P 500 closed the month at 2,711.74, down from 2,913.98 on September 30The NASDAQ closed the month at 7,305.90, down from 8,046.35 last month.   


Treasury Bond Yields rise:

The 10-year treasury bond closed the month yielding 3.05%, up from 2.86% on August 31, 2018. The 30-year treasury bond yield ended the month at 3.19%, up from 3.02% at the end of August. 

Mortgage rates higher in October:

 The November 1, 2018 Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 4.83%, up from 4.72% on September 27, 2018The 15-year fixed was 4.23%, up  from 4.16% on September 27.  The 5-year ARM was 4.04%, up from 3.97% at the end of September. 


GDP up 3.5% in third quarter:

The U.S. Bureau of Economic Analysis announced that the first reading of the nation’s gross domestic product (GDP) rose by 3.5% in the third quarter of 2018.   That beat expectations of a 3.4% rise, but was well below the 4.2% increase registered in the second quarter of 2018. The report also said that The PCE price index, a key indicator of inflation, rose at a 1.6% annual rate in the quarter. That was well below the 2.2% annual increase analysts forecasted. Consumer spending, which accounts for about two thirds of the U.S. economy grew by 4% in the third quarter. That marked the largest increase since the fourth quarter of 2014. 


September Nationwide Existing Home Sales:

 Data released this week from The National Association of Realtors showed that total existing home sales fell again in September. The number of existing homes sold in September fell 3.4% from August, and are down  4.1%  from one year ago. The median price paid for a home in The U.S. was up 4.2% from last September. That marked the 79th straight month of year over increases. The unsold inventory index is at a 4.4 month supply, up slightly form a 4.2 month supply one year ago. 


September California Existing Home Sales:

The California Association of Realtors reported that existing single family home sales totaled 382,550 in September on a seasonally adjusted annualized rate. That was down 4.3% from August and down a staggering 12.4% from last September, when sales totaled 436,920 on a seasonally adjusted annualized rate. The median price paid for a home in California was $587,850, up 4.2% from September 2017.On a more regional level the median price increased 4.7% in Los Angeles County10.6% in Ventura County, and 3.3% in Orange County from one year ago. Inventory levels continued to rise after hitting historic lows in 2017. The unsold inventory index in California stood at a 4.2 month supply in September, up from a 3.3 month supply in September 2017. Inventory levels have now increased for 6 straight months and are up 20.4% from one year ago. Listings are at the highest level in 31 monthsLos Angeles County has a 4.4 month supply, up from a 3.1 month supply last September. Orange County has a 4.3 month supply,  up  from 3.1 months last September. Ventura County had a 6.3 month supply of homes, up from a 4.7 month supply one year ago. 

Best,
Syd Leibovitch 
Rodeo Realty Inc.
9171 Wilshire Blvd. Suite 321
Beverly Hills, California 90210
CA DRE # 00858724