Economic Update for the week ending October 24, 2020


Stock markets moderately lower this week – Stocks markets closed slightly lower this week following three weeks of health gains. Third-quarter corporate profits began to be reported. They were stronger than expected. Investors watched for another round of stimulus to be agreed upon, but despite several deadlines, nothing was accomplished. The good news is that investors are convinced one will be passed, but it could be after the election when it will be safer for congresspeople to compromise without the fear of losing votes. The Dow Jones Industrial Average closed the week at 28,335.67, down 0.9% from 28,608.31 last week. It’s down 0.7% year-to-date. The S&P 500 closed the week at 3,465.39, down 0.5% from 3,483.81 last week. It’s up 7.3% year-to-date. The NASDAQ closed the week at 11,548.58, down 1.1% from 11,671.56 last week. It’s up 28.7% year-to-date.

U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 0.85%, up from 0.76% last week. The 30-year treasury bond yield ended the week at 1.64% up from 1.52% last week. We watch bond yields because mortgage rates often follow treasury bond yields.

Mortgage rates – The October 22, 2020, Freddie Mac Primary Mortgage Survey reported mortgage rates for the most popular loan products as follows: The 30-year fixed mortgage rate average was 2.80%, unchanged from 2.81% last week. The 15-year fixed was 2.33%, almost unchanged from 2.35% last week. The 5-year ARM was 2.87%, almost unchanged from 2.90% last week.

The California Association of Realtors reported that existing, single-family home sales totaled 489,590 on an annualized basis in September. That represented a month over month increase of 5.2.% from August and a staggering year over year increase of 21.2% from the number of homes sold in September 2019. Usually, because of seasonal adjustments, home sales begin to cool in September, but this September marked the highest monthly number of homes sold in over a decade. The median price paid for a home in California was $712,430, up 17.6% from the median price last September. Inventory levels were lower than one year ago. There was just a two month supply of homes for sale in September. On a regional level, the median price paid for a home was sharply higher than one year ago. The year-over-year increases were as follows: LA County’s median price was $747,380, up 12.7% from last September. Ventura County’s median price was $787,500, up 19.5% from last September. Orange County’s median price was $915,000, up 10.2% from last September.

The National Association of Realtors will be releasing data next week. The U.S. numbers will be included in next week’s report.