Author: Rodeo Realty Media Team

U.S. Employers add 227,000 jobs in January – The Labor Department reported that 227,000 new jobs were added in January. It was the most workers added in four months. Experts had expected a gain of 180,000, so this was welcome news to investors and stocks rose making up losses earlier in the week. The unemployment rate was almost unchanged at 4.8%, as more workers entered the workplace. The labor participation rate, which shows the share of working-age people in the workplace, increased to a 4 month high of 62.9% from 62.7%. Historically, the participation rate has hovered for several years near a 30 year low, showing that many people have given up looking for a job. The labor force is growing and people are re entering the workforce. That doesn’t mean that 227,000 new jobs is not a strong number, it is, but it does explain why the unemployment rate is so low and we keep adding jobs. It also may explain why wage growth has been so stubborn. Usually, when the unemployment rate drops to full employment levels, we see strong wage growth. Not in this recovery. Wages in January grew just 2.7% from last January, according to the report. 

Stock markets gain nearly 1% on Friday to end the week unchanged – Stocks had a rocky week. They opened down as last Friday’s low fourth quarter GDP number sunk in, some investors were spooked by the travel executive order, and some corporate profits came in lower than expected. Friday’s release of January’s strong job growth and another executive order rolling back some financial regulation in The Dodd Frank Bill sparked a rally and markets increased almost a full percentage point, which made up for all their losses throughout the week. 

The DOW Jones Industrial Average closed the week at 20,071.46, down just slightly from last week’s close of 20,093.78. The S&P 500 ended the week at 2,297.42, up slightly from its close of 2,294.69 last week. The NASDAQ closed the week at 5,666.77, almost unchanged from last week’s close of 5,660.78.

U.S. Treasury Bond yields – The 10-year U.S. Treasury Bond closed the week yielding 2.49%, unchanged from 2.49% last Friday. The 30-year Treasury Bond yield closed the week at 3.11%, up from 3.06% last week. Mortgage rates follow bond yields, so we watch treasury bonds closely.  

Mortgage rates – The Freddie Mac Primary Mortgage Survey released on February 2, 2017 revealed that average mortgage rates from lenders surveyed for the most popular mortgage products were as follows: The 30-year fixed rate average was 4.19%. The 15-year fixed average rate was 3.41% The 5/1 ARM average rate was 3.23%.

Pending home sales show increase – The California Association of Realtors reported that contracts signed to purchase existing (re-sale) homes in California in December rose 1.9% statewide from the number of contracts signed last December. Southern California saw the largest increase, rising 7.8% from last December. Pending sales are an indication of what future closed sales will total. If pending sales pull through to closing we see strong numbers 30 to 60 days later.

Have a great weekend,
Syd

DOW breaks 20,000 – All three major indexes hit record highs again this week before dropping slightly on Friday after a very disappointing GDP report was released. Investors seemed to shrug off the report and analysts expressed optimism for the economy in 2017 despite the poor showing in the final quarter of 2016. The DOW Jones Industrial Average closed the week at 20,093.78, up from last week’s close of 19,827.25. The S&P 500 ended the week at 2,294.69, up from its close of 2,271.32 last week. The NASDAQ closed the week at 5,660.78, up from last week’s close of 5,555.33.

U.S. Treasury Bond yields – The 10-year U.S. Treasury Bond closed the week yielding 2.49%, unchanged from 2.48% last Friday. The 30-year Treasury Bond yield closed the week at 3.06%, also unchanged from 3.05% last week. Mortgage rates follow bond yields, so we watch treasury bonds closely.

Mortgage rates – The Freddie Mac Primary Mortgage Survey released on January 19, 2017, revealed that average mortgage rates from lenders surveyed for the most popular mortgage products were as follows: The 30-year fixed rate average was 4.19%. The 15-year fixed average rate was 3.30%. The 5/1 ARM average rate was 3.20%.

Economy slows in final quarter of 2016 – The U.S. gross domestic product, the broadest measure of the value of all goods and services, grew at a 1.9% annualized rate in the fourth quarter of 2016. This followed a 3.5% rate in the third quarter, which was the largest gain in 2 years. The first half of the year showed the expansion had stalled. It was widely felt that the economy had picked up when the third quarter results showed growth had picked up, but this preliminary report, the first of 3, surprised experts who were expecting at least a 2.5% gain. Analysts quickly came out and expressed optimism for 2017. Investors did not react much by the report and stocks fell just slightly from record levels. For the entire year GDP grew just 1.9% in 2016. The report also showed that consumer spending increased 2.5% and inflation was very tame.

Stocks up on Inauguration Day – Stocks rose Friday after dropping steadily during the week. Even with Friday’s gains, stock markets ended the week lower. The DOW Jones Industrial Average closed the week at 19,827.25, down from last week’s close of 19,885.73. The S&P 500 ended the week at 2,271.32, unchanged from its close of 2,274.64 last week. The NASDAQ closed the week at 5,555.33, down from last week’s close of 5,574.12.

U.S. Treasury Bond yields – Treasury bond yields rose this week. The 10-year U.S. Treasury Bond closed the week yielding 2.48%, up from 2.40% last Friday. The 30-year Treasury Bond yield closed the week at 3.05%, up from 2.99% last week. Mortgage rates follow bond yields, so we watch treasury bonds closely.

Mortgage rates – The Freddie Mac Primary Mortgage Survey released on January 19, 2017 revealed that average mortgage rates from lenders surveyed for the most popular mortgage products were as follows: The 30-year fixed rate average was 4.09%. The 15-year fixed average rate was 3.34%. The 5/1 ARM average rate was 3.21%. Rates rose near the end of the week. They should be about 1/8% higher in next week’s survey.

California home sales and prices up in December – The California Association of Realtors reported that December’s statewide median price was $509,960, up 3.9% from last December’s median of $489,770. For the year, the median price was $502,250, up 5.4% from 2015’s median price. For 2016, preliminary figures had 416,250 existing homes sold, up 1.7% from 2015’s 409,410 existing homes sold. Existing home sales include all attached and detached re-sale single family homes reported as closed escrow to MLS systems throughout California. Very concerning was the unsold inventory index. It showed that there is only a 2.6 month supply of homes on the market. A normal market has a 6 to 7 month supply.

California unemployment rate drops to 5.2% – The California Employment Development Department reported that California employers added 3,700 net new jobs in December. It was a solid year with the state adding 383,900 new jobs in 2016. The unemployment rate dropped to 5.2%, down from 5.9% last December. Los Angeles County had even stronger results. The county’s employers added 58,600 net new jobs in 2016. The L.A. County unemployment rate ended the year at 5%, down from 6% at the end of 2015.

Have a great weekend!

Syd