Economic update for the week ending July 23, 2016

Stocks up for fourth straight week – Sparked by second quarter quarterly profits coming in above expectations, continued low interest rates, and better than expected economic reports stocks continued to advance. The Dow Jones Industrial Average closed the week at 18,570.85, up from 18,516.56 last Friday. The S&P 500 closed the week at 2,175.03, up from 2,161.75 last week. The NASDAQ closed the week at 5,100.06, up from last week’s close of 5,029.50. 

Bond yields unchanged for the week – After rising last week yields held steady this week. The 10 year U.S. Treasury bond yield closed the week at 1.57%, almost unchanged from 1.60% last Friday. The 30-year U.S. Treasury bond closed at 2.29%, unchanged from 2.30% last week. Mortgage rates follow bond yields so we watch bond yields closely.

Mortgage rates – Mortgage rates were slightly higher this week, yet still near historic lows. The Freddie Mac Primary Mortgage Survey released on July 21, 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 3.45%. The 15-year fixed average rate was 2.75%. The 5/1 ARM average rate was 2.78%.

California’s existing home sales up 10% in June – The California Association of Realtors reported that the number of existing homes sold in California were up 10% in June over May’s seasonally adjusted annualized number. It marked the first month over month double digit gain since January 2011. The statewide median price home in June was $519,440 up 5.5% from last June, as tight inventory levels and low interest rates continue to push up home prices. The unsold inventory index showed that inventory levels of existing homes dropped from a 3.4 month supply in May to a 3.2 month supply in June. The long run average has been a 6.1 month supply, indicating that inventory levels are running about 60% of normal, according to CAR. 

Have a great weekend!