Weekly Economic Update for Week Ending January 22, 2022

Stock markets suffered deep losses this week – Fears of higher interest rates due to The Federal Reserve’s shift in policy to combat inflation hit stock markets hard this week. Substantial losses were across the board and in all industries. The Dow Jones Industrial Average closed the week at 34,265.37, down 4.6% from 35,911.81 last week. It is down 5.7% year to date. The S&P 500 closed the week at 4,397.94, down 5.7% from 4,662.85 last week. The S&P is down 7.7% year to date. The NASDAQ closed the week at 13,758.92, down 7.6% from 14,893.75 last week. It is down 12% year to date. 

U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 1.75%, almost unchanged from 1.78% last week. The 30-year treasury bond yield ended the week at 2.07%, down from 2.12% last week. We watch bond yields because mortgage rates often follow treasury bond yields. 

Mortgage rates – The January 13, 2022 Freddie Mac Primary Mortgage Survey reported mortgage rates for the most popular loan products as follows: The 30-year fixed mortgage rate was 3.56%, up from 3.45% last week. The 15-year fixed was 2.79%, up from 2.43% last week. The 5-year ARM was 2.60%, up from 2.57% last week. 

2021 marks the most homes sold in 15 years – December California existing-home sales – The California Association of Realtors reported that existing-home sales totaled 426,850  on a seasonally adjusted annualized rate in December. Preliminary figures indicate that 444,520 homes closed escrow in 2021 in California, an increase of 7.9% from the 411,870 homes sold in 2020. That marks the highest number of yearly sales since the subprime lending market in 2006 when virtually anyone that wanted to buy a house could get qualified. The median price paid for an existing home in November was $796,570, up 11% from last December when the median price was $717,930. The annual median price climbed a record 19.3% in 2021. There was a 1.2-month supply of homes for sale in December, which marked the lowest inventory level ever recorded.