Economic Update For The Month Ending October 31, 2010


Stock markets -Stocks soared in the first three weeks of the month but collapsed in the final ten days, as COVID-19 cases spiked in the U.S. and Europe. Stocks dropped drastically after France, and Germany initiated lockdowns. Investors do not feel that the U.S. will go back to shutting down the economy but do fear that the re-opening will stall, and it will take longer than expected to return to normal. They also believe that Europe’s shutdown will severely affect their economy which was recovering from shutdowns earlier in the year. Congress’ failure to pass another round of stimulus also was a drag on stocks this month, but investors still feel certain that a large stimulus package will be passed after the election. This did not have the effect that the increase in COVID-19 cases had. It should be noted that third-quarter corporate profits have been extremely strong, and the third quarter preliminary GDP increased by 33.1% on an annualized basis from the second quarter when much of the country was under shut down. The output is still below one year ago, but we have been on the right track. The Dow Jones Industrial Average closed the month at 26,501.60, down 4.6% from 27,781.70 last month. It is down 7.1% year-to-date. The S&P 500 closed the month at 3,269.96, down 0.1% from 3,263.01 last month. It is up 1.2% year-to-date. The NASDAQ closed the week at 10,911.59, down 6.5% from 11,167.31 last month. It is up 21.6% year-to-date

U.S. Treasury bond yields – The 10-year treasury bond closed the month yielding 0.88%, up from 0.69%, last month. The 30-year treasury bond yield ended the month at 1.65%, up from 1.46% last month.

Mortgage rates – The Freddie Mac Primary Mortgage Survey released on October 29, 2020, reported mortgage rates for the most popular loan products as follows: The 30-year fixed mortgage rate average was 2.81%, down from 2.88% last month. The 15-year fixed was 2.32%, down slightly from 2.36% last month. The 5-year ARM was 2.88, almost unchanged from 2.90% last month.

The U.S. economy added 661,000 jobs in September – The Department of Labor Statistics reported that employers added 661,000 jobs in September. Analysts expected 800,000 new jobs, so this number was quite a bit below expectations. This represented a slowing in the pace of the job’s recovery, as over 1.3 million jobs were added in August. The unemployment rate dropped to 7.9% in September. It was 8.4% in August.

Home sales are released in the third week of the month for the previous month. These are September’s numbers.

September California Home Sales Report – 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.

U.S. Existing-home sales soared in September – The National Association of Realtors reported that existing home sales in September rose 6.4% month-over-month from August and rose 21% year-over-year from the number of homes sold in September 2019. The median price paid for a home increased 15% from one year ago. The inventory level in the United States was 1.47 million homes, a 2.7-month supply. That is a record low.