Stocks stable again this week – Hovering just above and below their all time highs, stocks ended the week pretty much unchanged for the third straight week. Energy stocks dropped as the price of oil plummeted to just under $43 per barrel, an 18-month low. Financial stocks rose after the Federal Reserve announced that all banks passed their annual stress test. The Dow Jones Industrial Average ended the week at 21,394.76, up slightly from 21,384.28 last week. The S&P 500 closed the week at 2,438.30, just above its close last week of 2,433.15. The NASDAQ closed the week at 6,265.25, up from last week’s close of 6,151.76.
Bond yields – The 10-year Treasury bond closed the week at 2.15%, almost unchanged from 2.16% last week. The 30-year treasury yield ended the week at 2.71%, down from 2.78% last week. Mortgage rates follow treasury bond yields so we watch bond yields carefully.
Mortgage Rates remain at lowest levels of the year – The June 22, 2017 Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 3.90%, almost unchanged from 3.91% last week. The 15-year fixed was 3.17%, almost unchanged from 3.18% last week. The 5-year ARM was 3.14%, also unchanged from 3.15% last week.
California existing home sales numbers and prices accelerate in May – After a disappointing April, existing home sales bounced back in May. On a seasonally adjusted annualized rate, single family existing home sales totaled 430,460 in May. That was a 5.4% increase from April and a 2.6% increase from last May. The statewide median price paid for a home was $550,200, up 2.3% from April and up 5.8% from May 2016.
At a regional level, the Los Angeles metro region had a 6.9% increase in sales. Existing home sales include all detached and attached homes, which include single family, town-homes, condominiums, and co-ops.
C.A.R.’s Unsold Inventory Index fell from 3.3 months in April to 2.9 months in May. The index measures the number of months needed to sell the supply of homes on the market. The index stood at 3.4 months in May 2016.
With home inventory at record low levels, prices will continue to rise. When you have more buyers than sellers that is what happens. Earlier in the year I predicted a 10% rise in the median price. I believe we are on track for that. The number of sales at 430,000, which would be much higher if more sellers listed, is the highest level in many years. Many sellers worry that they will not find anything to buy after they sell. With 430,000 sales in California there are plenty of homes selling. Unfortunately, as buyers they just need to act fast and chose from fewer homes. We can’t have it both ways. If homes sat on the market and were difficult to sell there would be plenty of homes to chose from when their home sold. In this market where homes are selling there are fewer homes to chose from and they need to act fast. Every buyer wishes, or should wish, that they bought a home they passed on just months ago as those homes are much more expensive now. So many of our clients have been “priced out” of neighborhoods they were able to afford just months ago. Especially people that hoped to “move up” to a more expensive home.
Have a great weekend!