Economic update for the week ending October 22, 2016

Stocks up slightly this week – Third quarter earnings season began with mixed results. Several tech companies beat earnings expectations while several very large companies reported earnings that were below expectations. As more companies report the market may move depending on the profit levels. All in all it was a pretty lackluster week. The Dow Jones Industrial Average closed the week at 18,145.71, up from 18,138.38 last Friday. The S&P 500 closed the week at 2,141.16, up from 2,132.98 last week. The NASDAQ closed the week at 5,257.40, up from last week’s close of 5,214.16.

U.S. Treasury Bond yields drop this week – The 10 year U.S. Treasury Bond yield closed the week at 1.74%, down from 1.80% last Friday. The 30-year U.S. Treasury Bond closed at 2.48%, down from 2.55% last week. Mortgage rates follow bond yields so we watch bond yields closely.

Mortgage rates up just slightly this week – The Freddie Mac Primary Mortgage Survey released on October 20 showed that average mortgage rates from lenders surveyed for the most popular mortgage products were as follows: The 30-year fixed rate average was 3.52%. The 15-year fixed average rate was 2.79%. The 5/1 ARM average rate was 2.85%. I’d expect to see rates just slightly lower next week based on where we were at the end of the week. 

California existing home sales up in September – The California Association of Realtors reported that existing single family home sales totaled 425,680 in September on a seasonally annualized rate, up 1.8% from August’s rate and up 0.8% from last September. This marked the first year over year increase in 7 months as extremely low inventory has led to fewer sales. 

California’s median price paid for an existing home up 6.1% – Year over year the median price paid for a single family home increased 6.1% in September to $514,320 according to The California Association of Realtors. The median price in September 2015 was $494,670. 

Homes on the market remain near all time low levels – C.A.R. also reported that the unsold inventory index in September showed a 3.5 month supply of homes on the market. A “normal” market has a 6 1/2 month supply of homes. I’d expect prices to continue to rise until the inventory level gets closer to normal levels.  

U.S. existing home sales up in September – The National Association of Realtors reported that total existing home sales, which include single family detached homes, town-homes, condos, and co-ops, increased 3.2% in September from August levels. Sales year over year were up just 0.6% from last September, but The September figure represented a nice rebound after a disappointing July and August sales level. One key figure in the report was an increase in first time buyers who accounted for 34% of the total sales. That was a 4 year high. Distressed sales accounted for just 4% of sales which is a new low according to N.A.R. The median price for an existing home nationwide increased 5.6% from last September as low inventory pushed prices higher.

Hope you have a great weekend!