| Economic news this week included some data that indicated that inflation may be moderating. This included that the Consumer Price Index (CPI), showed that consumer prices increased 3.4% year-over-year in April, down from a 3.5% a year-over-year increase in March. The Core CPI index, which strips out food and energy costs, rose 3.6% year-over-year, down from 3.8% in March. That marked the lowest annual increase in core inflation since early 2021. Bond yields dropped for the fourth consecutive week as investors feel that rates will continue to drop as inflation moderates. The prospect of lower borrowing costs, while consumers remain spending, drove stock markets up again. The S&P and Nasdaq have increased for four consecutive weeks, while the Dow celebrated a fifth consecutive week of gains and ended the week over 40,000 for the first time.
Stock markets – The Dow Jones Industrial Average closed the week at 40,003.59, up 1.2% from 39,512.84 last week. It is up 6.1% year-to-date. The S&P 500 closed the week at 5,303.27, up 1.6% from 5,222.68 last week. The S&P is up 11.2% year-to-date. The Nasdaq closed the week at 16,684.97, up 2.1% from 16,340.87 last week. It is up 11.1% year-to-date. U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 4.42%, down from 4.50% last week. The 30-year treasury bond yield ended the week at 4.56%, down from 4.64% 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 May 16, 2024, were as follows: The 30-year fixed mortgage rate was 7.02%, down from 7.09% last week. The 15-year fixed was 6.28%, down from 6.38% last week. Mortgage rates have dropped for four straight weeks. 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. Year-over-year California home prices jumped 11.4% in April – The California Association of Realtors reported that existing-home sales totaled 275,540 on an annualized rate in April, up 3% from an annualized rate of 267,470 in March, and up 4.4 from a revised 226,960 homes sold on an annualized basis last April. There was a 2.6-month supply of homes on the market in March, up from a 2.5-month supply one year ago. The statewide median price paid for a home in April was $904,210, up 5.8% from $854,490 in March and up 11.4% from a revised median price of $811,520 in April 2023. The graph below shows sales data by county in Southern California.
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