Economic update for the week ending September 2, 2017 and August month end

Stocks up again this week – Stock markets finish higher in August – Stocks finished higher for the second straight week. A revised second quarter GDP report revealed that growth reached 3% for the first time since 2015. Renewed reports of tax reform and better manufacturing data moved markets up this week – The Dow Jones Industrial Average ended the week at 21,978.56, up from 21,814.67 last week. The S&P 500 closed the week at 2,476.55, up from its close last week of 2,443.05. The NASDAQ closed the week at 6,435.33, up from last week’s close of 6,265.64.

Bond yields unchanged this week – Remaining near the lowest levels of the year – The 10-year Treasury bond closed the week at 2.16%, almost unchanged from 2.17% last week. The 30-year treasury yield ended the week at 2.76%, slightly up from 2.75% last week. Mortgage rates follow treasury bond yields so we watch bond yields carefully.

Mortgage Rates lower this week – The August 31, 2017 Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 3.82%, down slightly from 3.86% last week. The 15-year fixed was 3.12%, down slightly from 3.16% last week. The 5-year ARM was 3.14%, down from 3.17% last week.

Economic update for the month ending August 31, 2017

The Dow Jones Industrial Average ended the month at 21,948.10, up from its July 31, 2017 close of 21,891.12.  The Dow is up over 11.3% year to date. The S&P 500 closed the month at 2,471.65, unchanged from its July close of 2,470.31. The S&P is up  10.5% year to date. The NASDAQ closed the month at 6,428.66, up from last month’s close of 6,348.12. It’s up 19.5% year to date. 

Treasury Bond yields drop in August – The 10-year Treasury bond closed on August 31, 2017 at 2.17%, down from 2.30% at the end of July.  The 30-year treasury yield ended the month at 2.73%, down from 2.89% last month.

Mortgage Rates remain near historic lows – The 30-year fixed mortgage rate remained under 4% in August. The August 31, 2017 Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 3.82%, down from 3.93% on August 3, 2017. The 15-year fixed was 3.12%, down from last month’s close of 3.18%. The 5-year ARM was 3.14%, down slightly from 3.18% on August 3, 2017.

Existing home sales and prices higher in July than last July –Sales of existing homes in California totaled a seasonally annualized rate of 421,460 units in July, according to the California Association of Realtors. The number of sales of existing homes was down 4.9% from June’s sales pace. July’s sales pace was still 0.9% higher than last July. The statewide median price was $549,460, up 7.4% from July 2016.  There was a 3.2 month supply of homes for sale, up from 2.7 months in June, but down from 3.6 months in July 2016.

Fewer homes sold nationwide in July than June, yet still more than one year ago – The National Association of Realtors reported that total home sales slipped 1.3% in July from June’s sales pace level. Year-over-year the pace of home sales were still 2.1% higher than last July. Prices have continued to rise. The median price was 6.2% higher this July than July 2016. That marked the 65th straight month of year-over-year price increases. Inventory levels continued to shrink. The number of homes for sale nationwide was down 9% from one year ago. The unsold inventory nationwide represents a 4.2 month supply. That is down from a 4.8 month supply last July. Tight supply is causing prices to rise. Total existing home sales include all re-sale single family one to four unit homes, condominiums, co-ops, and town homes.

Home affordability slips in California as prices rise – The California Association of Realtors reported that  29% of California households could afford to buy a $559,260 median-priced home in the second quarter. That is down from 32% in the first quarter of 2017 and 31% one year ago in Q2 2016. The annual income required to purchase the median-priced home was $110,780. They found that 38% of California households were able to purchase a median-priced condominium or town-house, which was $443,400. The annual income required was $88,870.

We are waiting for job gain numbers which will be out next Friday. That’s a good indicator of where the economy is heading.

Have a great holiday weekend!