| Stock markets soared in November – Stock markets notched seven straight weeks of gains as key reports indicated that inflation was cooling. The October Consumer Price Index (CPI) showed that consumer prices in October had climbed 3.2% from one year earlier. While the Fed target is 2% this was a step in the right direction. Inflation peaked in June 2022 at 9.1% and worked its way down every month for a year hitting 3% in June 2023. In July, August, and September the year-over-year inflation rate worked its way back up. It was 3.7% in September, so dropping to 3.2% in October was welcome news to investors. The Producer Price Index and Personal Compensation Expenditures Price Index also showed that inflation tamed in October. The jobs market cooled as well with 150,000 new jobs created in October, about ½ the number of new jobs created in September. This news led investors to feel that the economy was slowing, and inflation was taming. Bond yields and mortgage rates fell steadily in November with the 30-year mortgage ending the month about one full percentage point below its 23-year high in mid-October. Experts feel that rate hikes are behind us and that there may even be a Fed rate reduction next year. The Dow Jones Industrial Average closed the month at 35,950.89, up 8.8% from 33,052.87 on October 31. It is up 8.5% year-to-date. The S&P 500 closed the month at 4,567.80, up 8.9% from 4,193.80 last month. It is up 19% year-to-date. The NASDAQ closed the month at 14,262.22, up 11% from 12,851.24 last month. It is up 36.3% year-to-date.
U.S. Treasury bond yields dropped in November – Cooling inflation led to lower bond yields marking the largest monthly drop in yields of the year. The 10-year treasury bond closed the month yielding 4.38%, down from 4.88% last month. The 30-year treasury bond yield ended the month at 4.54%, down from 5.04% last month. We watch bond yields because mortgage rates often follow treasury bond yields. Mortgage rates – The Freddie Mac Primary Mortgage Survey reported that mortgage rates as of November 30, 2023, for the most popular loan products were as follows: The 30-year fixed mortgage rate was 7.22%, down from 7.79% at the end of October. The 15-year fixed was 6.56%, down from 7.03% at the end of October. The 30-year fixed rate peaked at around 8.25% in mid-October, a 23-year high.
Home sales data is released by the National Association of Realtors and the California Association of Realtors on the third week of the month for the previous month. Below are the October results. U.S. existing-home sales – The National Association of Realtors reported that existing-home sales totaled 3.79 million units on a seasonally adjusted annualized rate in October, down 14.6% from an annualized rate of 4.44 million in October 2022. The median price for a home in the U.S. in October was $391,800, up 3.2% from $378,800 last October. There was a 3.6-month supply of homes for sale in October, up from a 3.3-month supply last October. First-time buyers accounted for 28% of all sales. Investors and second-home purchases accounted for 15% of all sales. All cash purchases accounted for 29% of all sales. Foreclosures and short sales accounted for 2% of all sales. California third quarter housing affordability – The California Association of Realtors released their housing affordability index. It included that single-family detached-home affordability dropped to 15% in the third quarter of 2023, down from 16% in the second quarter and down from 18% one year ago. An income of $221,200 was needed to qualify for the monthly payment of $5,530 to purchase a $843,600 median-priced home. Affordability for a condo or townhome dropped to 23% in the third quarter. An income of $170,400 was needed to qualify for the $4,200 payment to purchase a $650,000 median-price condo or townhome. California existing-home sales – The California Association of Realtors reported that existing-home sales totaled 241,710 units on a seasonally adjusted annualized basis in October, down 11.9% from a revised 274,410 annualized sales pace in October 2022. October marked the thirteenth straight month of the annualized sales rate dropping under 300,000 on an annualized basis, and the second consecutive month of sales dropping below 250,000 annualized sales, a level that was thought could never happen. Year-to-date, the number of homes sold was down 27.2% in October. The statewide median price paid for a home in October was $840,360, up 5.3% from a revised $798,140 a year ago. There was a 2.7-month supply of homes for sale in October, down from a 3.1-month supply one year ago. The graph below shows sales data by county in Southern California.
|
