Economic update for the week ending February 26, 2022

Stock markets – Stock markets dropped at the beginning of the week and dropped sharply early Thursday following Russia’s invasion of Ukraine. By Thursday afternoon stock markets recovered and ended the day higher. Stock markets rallied again on Friday as investors bought stocks that they felt were well valued due to their steep declines since the first of the year. The Dow Jones Industrial Average closed the week at 34,058.75, down 0.1% from 34,079.18 last week. It is down 6.2% year-to-date. The S&P 500 closed the week at 4,384.65, up 0.8% from 4,348.87 last week. The S&P is down 8% year-to-date. The NASDAQ closed the week at 13,694.52, up 1.1% from 13,548.07 last week. It is down 12.5% year-to-date.

U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 1.97%, up from 1.92% last week. The 30-year treasury bond yield ended the week at 2.29%, up from 2.24% last week. We watch bond yields because mortgage rates often follow treasury bond yields.

Mortgage rates – The February 24, 2022, Freddie Mac Primary Mortgage Survey reported that mortgage rates for the most popular loan products were as follows: The 30-year fixed mortgage rate was 3.89%, down from 3.92% last week. The 15-year fixed was 3.14% unchanged from 3.15% last week. The 5-year ARM was 2.98%, unchanged from 2.98% last week.

January 2022 U.S. Existing Home SalesThe National Association of Realtors reported that existing-home sales totaled 6.5 million on a seasonally adjusted annualized rate in January, up 6.7% month-over-month from the annualized rate of sales in December 2021. Year-over-year sales were down 2.3% from the annualized rate of 6.65 million in January 2021. The median price of a home in the U.S. in January was $350,300, up 15.4% from $303,600 one year ago. January marked a record 119-straight months of year-over-year increases in the median price. Inventory levels remained at record lows. There was just a 1.6 month supply of homes for sale in January, down from a 1.9 month supply in January 2021. First-time buyers accounted for 27% of all sales, down from 33% one year ago. Investors and second-home purchases accounted for 22% of all sales, up from 17% last January. All-cash purchases accounted for 27% of all sales, up from 19% in January 2021. Foreclosure and short-sales accounted for less than 1% of all sales remaining at a historic low.