Economic update for the week ending September 30, 2016

Stocks have huge swings, yet end the week up slightly, and end the month down slightly – Despite large daily swings, stocks were pretty stable this month. The last two days were indicative of what we have seen with stocks down sharply Thursday only to be up sharply Friday. Higher oil prices helped stocks this week, and falling health and banking stocks hurt markets. The Dow Jones Industrial Average closed the week at 18,308.15 up from 18,261.45 last Friday. The Dow was down from 18,400.88 on August 31. The S&P 500 closed the week at 2,168.27, up from 2,164.69 last week. It was unchanged from 2,170.95 on August 31. The NASDAQ closed the week at 5,312.00, up from last week’s close of 5,305.75. The NASDAQ closed the month up from 5,213.22 on August 31. 

U.S. Treasury Bond yields flat this week and just slightly higher for the month – The 10 year U.S. Treasury Bond yield closed the week at 1.60%, down from 1.62% last Friday. It was 1.58% on August 31. The 30-year U.S. Treasury Bond closed at 2.32%, down from 2.34% last week. It was 2.23% on August 31. Mortgage rates follow bond yields so we watch bond yields closely.

Mortgage rates unchanged this week – The Freddie Mac Primary Mortgage Survey released on September 29, 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 3.43%. The 15-year fixed average rate was 2.72%. The 5/1 ARM average rate was 2.81%. 

California Association of Realtors releases 2017 housing forecast – Key points in their report were: Prices would continue to increase, but at a more tempered rate. They feel prices will rise 4.3% in 2017, compared to a 6.2% increase in 2016. The median price will rise to $525,600 in 2017, up from $503,900 in 2016. The number of sales would be flat, up just 1.4% in 2017. That would equate to 413,000 units, up from 407,300 units forecasted in 2016. The 30 year fixed would rise slightly to 4% in 2017, up from an average of 3.6% in 2016.