Stock markets – More strong economic news was released this week. The headline was the fourth quarter GDP results. The economy grew at a blistering 3.3% in the fourth quarter, well above analysts expectations. Incredibly strong consumer spending accounted for 80% of the increase. At the same time the PCE (personal consumption) index, an important gauge of inflation, came in below 3%, its lowest level since March 2021. Corporate profits for the last quarter of 2023 have been quite strong. The S&P hit record highs for six days in a row, before closing just slightly lower on Friday and the Dow is just off its record high. The Dow Jones Industrial Average closed the week at 38,109.43, up 0.6 from 37,863.80 last week. It is up 1.1% year-to-date. The S&P 500 closed the week at 4,890.97, up 1% from 4,839.81 last week. The S&P is up 2.5% year-to-date. The Nasdaq closed the week at 15,455.36, up 1% from 15,310.97 last week. It is up 3% year-to-date.
U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 4.15%, unchanged from 4.15% last week. The 30-year treasury bond yield ended the week at 4.38%, almost unchanged from 4.36% last week. We watch bond yields because mortgage rates follow bond yields.
Mortgage rates – Every Thursday Freddie Mac publishes interest rates based on a survey of mortgage lenders throughout the week. The Freddie Mac Primary Mortgage Survey reported that mortgage rates for the most popular loan products as of January 18, 2024, were as follows: The 30-year fixed mortgage rate was 6.69%, up from 6.60% last week. The 15-year fixed was 5.95%, up from 5.76% last week.
The graph below shows the trajectory of mortgage rates over the past year.
Freddie Mac was chartered by Congress in 1970 to keep money flowing to mortgage lenders in support of homeownership and rental housing. Their mandate is to provide liquidity, stability, and affordability to the U.S
U.S. existing-home sales – The National Association of Realtors reported that existing-home sales totaled 3.78 million units on a seasonally adjusted annualized rate in December, down 6.2% from an annualized rate of 4.03 million in December 2022. The median price for a home in the U.S. in December was 382,600, up 4.4% from $366,500 last December. There was a 3.2-month supply of homes for sale in December, up from a 2.9-month supply last December. First-time buyers accounted for 29% of all sales. Investors and second-home purchases accounted for 16% of all sales. All-cash purchases accounted for 29% of all sales. Foreclosures and short sales accounted for 2% of all sales. In 2023, 4.09 million existing-homes sold, the lowest level since 1995, while the median price reached a record high level of $389,800. Existing-homes include single-family, condominium, townhomes, and co-ops.
Have a great weekend!