Economic Update for Week Ending June 25, 2022

Stock markets soared to rebound from three straight weeks of steep losses – Stocks markets jumped again on Friday and posted their second best week of the year. Comments from Federal Reserve officials and testimony by Fed Chairman Powell to Congress this week led sinvestors to believe that future rate hikes would not be as severe as previously thought. Powell also testified that he felt that even if there were to be a recession, which he felt could be avoided, it would be mild. He quoted many reasons for his belief in the strength of the economy which included: the strong position of U.S. banks, the strength of labor markets, the strength of the housing market and home equity, and a strong dollar. A key inflation index showed that commodity prices have fallen as recession fears have grown, indicating that the rate hikes are working and that inflation may be moderating. The Dow Jones Industrial Average closed the week at 31,500.68 up 5.4% from 29,888.78 last week. It is down 13.3% year-to-date. The S&P 500 closed the week at 3,911.74, up 6.5% from 3,674.84 last week. The S&P is down 18.0% year-to-date. The NASDAQ closed the week at 11,609.62, down 7.6% from 10,789.35 last week. It is down 25.8% year-to-date.

U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 3.13%, down from 3.25% last week. The 30-year treasury bond yield ended the week at 3.26%, down from 3.30% last week. 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 June 23, 2022, for the most popular loan products, were as follows: The 30-year fixed mortgage rate was 5.81%, up from 5.78% last week. The 15-year fixed was 4.92%, up from 4.81% last week. The 5-year ARM was 4.41%, up from 4.33% last week.

U.S. existing-home sales – The National Association of Realtors reported that existing-home sales totaled 5.41 million units on a seasonally adjusted annualized rate in May, down 3.4% month-over-month from the annualized number of sales in April. Year-over-year sales were down 8.6% from the annualized rate of 5.92 million in May 2021. The median price of a home in the U.S. in April was $407,600, up 14.8% from $355,000 one year ago. May marked a record 123 consecutive months of year-over-year increases in the median price. Inventory levels increased 12.6% from April, but are still 4.1% below the number of homes for sale in May 2021. There was a 2.6-month supply of homes for sale in May, up slightly from a 2.5-month supply last May. First-time buyers accounted for 27% of all sales. Investors and second-home purchases accounted for 16% of all sales. All-cash purchases accounted for 25% of all sales. Foreclosure and short-sales accounted for less than 1% of all sales remaining at a historic low.

Economic update for the week ending May 28, 2022

Stock markets snapped one of the longest weekly losing streaks on record with their best week since November 2020– Stock markets rallied after a core inflation report showed consumer personal consumption expenditures prices rose 4.9% in April, down from 5.2% in March. Bond yields and mortgage rates have dropped as well over the past couple of weeks as recent reports suggest inflation peaked in March and seems to be moderating. Retail sales also took an unexpected jump showing that the strength of the economy has not subsided. The Dow Jones Industrial Average closed the week at 33,212.60, up 6.2% from 31,261.90 last week. It is down 8.6% year-to-date. The S&P 500 closed the week at 4,158.25, up 6.6% from 3,901.36 last week. The S&P is down 12.8% year-to-date. The NASDAQ closed the week at 12,131.13, up 6.9% from 11,352.62 last week. It is down 22.5% year-to-date.

U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 2.74% down from 2.78% last week. The 30-year treasury bond yield ended the week at 2.97%, down from 2.99% last week. We watch bond yields because mortgage rates often follow treasury bond yields.

Mortgage rates – Home mortgage rates appear to be stabilizing. The Freddie Mac Primary Mortgage Survey reported that mortgage rates as of May 19, 2022 for the most popular loan products were as follows: The 30-year fixed mortgage rate was 5.10%, down from 5.25% last week. The 15-year fixed was 4.31%, down from 4.43% last week. The 5-year ARM was 4.20%, up from 4.08% last week.

Economic update for the week ending May 21, 2022

Stock markets dropped again this week – The Dow suffered its eighth consecutive weekly loss which marks its longest weekly losing streak since 1923. The S&P and Nasdaq suffered their seventh weekly loss, their longest losing streak since 2001. It is a strange time.

First-quarter corporate profits were much stronger than expected, and the economy and job market are showing very strong numbers; however, investors fear that inflation, higher interest rates, war, supply chain shortages, and a China lockdown will soon lead to a drop in profits, and possibly a recession.  The Dow Jones Industrial Average closed the week at 31,261.90, down 2.1% from 32,196.66 last week. It is down 11.4% year-to-date.  The S&P 500 closed the week at 3,901.36, down 2.4% from 4,023.89 last week. The S&P is down 15.6% year-to-date. The NASDAQ closed the week at 11,354.62, down 2.8% from 11,805.00 last week. It is down 24.5% year-to-date. 

U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 2.78%, down from 2.93% last week.  The 30-year treasury bond yield ended the week at 2.99%, down from 3.10% last week. We watch bond yields because mortgage rates often follow treasury bond yields. 

Mortgage rates – Home mortgage rates appear to be stabilizing. The Freddie Mac Primary Mortgage Survey reported that mortgage rates as of May 19, 2022 for the most popular loan products were as follows: The 30-year fixed mortgage rate was 5.25%, down from 5.30% last week. The 15-year fixed was 4.43%, down from 4.48% last week. The 5-year ARM was 4.08%, up from 3.98% last week. 

U.S. existing-home sales – The National Association of Realtors reported that existing-home sales totaled 5.61 million units on a seasonally adjusted annualized rate in April, down 2.4% month-over-month from the annualized number of sales in March. Year-over-year sales were down 5.9% from the annualized rate of 5.96 million in April 2021.  The median price of a home in the U.S. in April was $391,200, up 14.8% from $340,700 one year ago. April marked a record 122 consecutive months of year-over-year increases in the median price. Inventory levels ticked up slightly from March but remained near record lows. There was a 2.2-month supply of homes for sale in April, down from a 2.3 month supply one year ago.  First-time buyers accounted for 28% of all sales.  Investors and second-home purchases accounted for 17% of all sales.  All-cash purchases accounted for 26% of all sales.  Foreclosure and short-sales accounted for less than 1% of all sales remaining at a historic low. 

California existing-home sales –  Lower inventory has led to a drop in the number of sales and a rise in prices – The California Association of Realtors reported that existing-home sales totaled 419,040 on a seasonally adjusted annualized rate in April, which marked an 8.5% year-over-year drop from the number of homes sold in April 2021. Existing-home sales in the first quarter of 2022 are down 7.0% from the number of homes sold in the first quarter of 2021, which pretty closely matches the drop in the number of new listings. The median price paid for a home in March was $884,890, up 4.2% from March’s 2021 median price of $849,080. Year-over-year prices are up 8.5%. There was a 1.8-month supply of homes for sale in April, up slightly from a 1.6-month supply of homes in April 2021. 

The graph below shows regional figures by county in Southern California.

Economic Update for Week Ending 5/14/22

Despite a rally on Friday stock markets posted another large weekly loss – Stock markets rallied on Friday to end a turbulent week. The S&P and the Nasdaq posted their sixth weekly loss, their longest losing streak since 2012. The Dow has dropped for seven consecutive weeks, its longest losing streak since 1980. Over the past week, the Labor Department released four economic reports. Last Friday’s jobs report suggested that job growth is still strong which increases the chance of more aggressive rate hikes and tightening by the Fed. Thursday’s CPI, PPI and Import price reports suggested that inflation may have peaked in March. For example, the CPI report had inflation in April up 8.3% from one year earlier which is a very high inflation number but below the 8.5% year-over-year level in March, a 40-year high. First-quarter corporate profits were strong with over 70% of companies beating expectations. However, investors expect inflation and rising interest rates to increase expenses and lower profits in the coming months. The Dow Jones Industrial Average closed the week at 32,196.66, down 2.1% from 32,889.37 last week. It is down 11.4% year-to-date. The S&P 500 closed the week at 4,023.89, down 2.4% from 4,123.34 last week. The S&P is down 15.6% year-to-date. The NASDAQ closed the week at 11,805.00, down 2.8% from 12,144.66 last week. It is down 24.5%, year-to-date.

U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 2.93%, down from 3.12% last week. The 30-year treasury bond yield ended the week at 3.10%, down from 3.23% last week. We watch bond yields because mortgage rates often follow treasury bond yields.

Mortgage rates – Home mortgage rates have continued to increase. Freddie Mac Primary Mortgage Survey reported that mortgage rates as of May 12, 2022 for the most popular loan products were as follows: The 30-year fixed mortgage rate was 5.30%, up slightly from 5.27% last week. The 15-year fixed was 4.48% down slightly from 4.52% last week. The 5-year ARM was 3.98%, up slightly from 3.96% last week.

California housing affordability improved in the first quarter of 2022 – The California Association of Realtors published their first-quarter housing affordability report this week. They found that 24% of California households could afford to purchase a $797,470 median-priced home. That is down from 25% in the fourth quarter of 2021, and down from 27% in the same period one year ago. A minimum income of $158,000 was needed to qualify for the monthly payment of $3,950 which included principal, interest, and taxes on a 30-year fixed-rate mortgage at a 3.97% rate. Rates are substantially higher now than they were in the first quarter, but appear to be stabilizing. Condominiums were more affordable. The report found that 32% of California households were able to afford a $640,350 median-priced condo or townhouse. A minimum annual income of $126,800 was needed to qualify for the monthly payment of $3,170.

Home sales figures for April will be released next week by the California Association of Realtors and the National Association of Realtors. They will be included in next week’s report. You can get April figures for your city or zip code from my website now.

Economic Update For The Week Ending April 30, 2022

Stock markets fell for a fifth straight week – U.S. stocks suffered steep losses again on Friday to close out a brutal month. The Nasdaq had its worst month since 2008 as the technology stock sell-off continued. The Nasdaq is now in bear territory, down more than 20% for the year. The Dow and S&P 500 did not fare much better this week with the Dow plunging 939 points on Friday. The S&P had its worst month since March 2020 when the pandemic shutdown was enacted. Higher interest rates, higher fuel costs, supply shortages, and higher employment costs have investors feeling that earnings, while strong in the first quarter, will be lower in the future. The Dow Jones Industrial Average closed the week at 32,977.21, down 2.5% from 33,811.40 last week. It’s down 9.25% year-to-date. The S&P 500 closed the week at 4,131.93, down 3.3% from 4,271.78 last week. The S&P is down 13.3% year-to-date. The NASDAQ closed the week at 12,334.64, down 3.8% from 12,839.29 last week. It is down 21.2%, year-to-date. 

U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 2.89%, unchanged from 2.90% last week. The 30-year treasury bond yield ended the week at 2.96%, unchanged from 2.95% last week. We watch bond yields because mortgage rates often follow treasury bond yields. 

Mortgage rates – Home mortgage rates have continued to increase. Freddie Mac Primary Mortgage Survey reported that mortgage rates as of April 28, 2022 for the most popular loan products were as follows: The 30-year fixed mortgage rate was 5.10%, unchanged from 5.11% last week. The 15-year fixed was 4.40% almost unchanged from 4.38% last week. The 5-year ARM was 3.78%, almost unchanged from 3.75% last week. 

Economic Update For The Month Ending April 30, 2022

Stock markets suffered steep losses in April – U.S. stocks closed out a brutal month with almost unprecedented losses. The Nasdaq had its worst month since 2008 as the technology stock sell-off continued. The Nasdaq is now in bear territory, down more than 20% for the year. The S&P had its worst month since March 2020 when the pandemic shutdown was enacted. For the first four months of 2022, the S&P has dropped 13.3%, its largest first four-month decline since World War II.  Higher interest rates, inflation, higher fuel costs, supply shortages, the war in Ukraine, and higher employment costs have investors feeling that earnings, while strong in the first quarter, will be lower in the future. The Dow Jones Industrial Average closed the week at 32,977.21, down 4.1% from 34,678.35 on March 31. It’s down 9.25% year-to-date. The S&P 500 closed the week at 4,131.93, down 8.8% from 4,530.31 last month. The S&P is down 13.3% year-to-date. The NASDAQ closed the week at 12,334.64, down 13.3% from 14,220.52 last month. It is down 21.2%, year-to-date. 

U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 2.89%, up from 2.32% last month. The 30-year treasury bond yield ended the week at 2.96%, up from 2.44% last month. We watch bond yields because mortgage rates often follow treasury bond yields. 

Mortgage rates – Home mortgage rates have continued to increase. Freddie Mac Primary Mortgage Survey reported that mortgage rates as of April 28, 2022 for the most popular loan products were as follows: The 30-year fixed mortgage rate was 5.10%, up from 4.67% last month. The 15-year fixed was 4.40% up from 3.83% last month. The 5-year ARM was 3.50%, up from 3.75% last month. 

The U.S. economy added 431,000 new jobs in March – The Department of Labor and Statistics reported that 431,000 new jobs were added in March. Economists surveyed had expected 490,000 new jobs. The unemployment rate fell to 3.6% in March, down from 3.8% in February. The labor-force participation rate (the share of workers with a job or actively looking for a job) rose to 62.4% in March, up from 62.3% in February. It is still below the 63.6% level before the pandemic but has moved up steadily as more people are returning to the workforce. Average hourly wages, an indicator of inflation increased 5.6% from March 2021. The April jobs report will be released next Friday. 

March 2022 home sales – Home sales figures are released in the third week of the month for the previous month.

U.S. existing-home sales – The National Association of Realtors reported that existing-home sales totaled 5.77 million on a seasonally adjusted annualized rate in March, down 2.7% month-over-month from the annualized rate of sales in February. Year-over-year sales were down 4.5% from the annualized rate of 6.04 million in March 2021.  The median price of a home in the U.S. in March was $375,300, up 15.0% from $326,300 one year ago. March marked a record 121 consecutive months of year-over-year increases in the median price. Inventory levels remained near record lows. There was just a 2-month supply of homes for sale in March, down from a 2.1 month supply one year ago. First-time buyers accounted for 30% of all sales. Investors and second-home purchases accounted for 18% of all sales. All-cash purchases accounted for 28% of all sales. Foreclosure and short-sales accounted for less than 1% of all sales remaining at a historic low. 

California existing-home sales –  The California Association of Realtors reported that existing-home sales totaled 426,970 on a seasonally adjusted annualized rate in March. That marked a 4.4% year-over-year drop from the number of homes sold in March 2021. Existing-home sales in the first quarter of 2022 are down 7.0% from the number of homes sold in the first quarter of 2021, which pretty closely matches the drop in the number of new listings. The median price paid for a home in March was $849,080, up 10.1% from February’s median price of $771,270. Year-over-year prices are up 11.9%. There was a 1.7-month supply of homes for sale in March, down from a 2-month supply of homes for sale in February, and unchanged from a 1.7-month supply of homes in March 2021. 

The graph below shows regional figures by county in Southern California.

Economic update for the week ending April 16, 2022

Stocks down for a second straight week – Stock markets dropped and interest rates continued to rise this week. The March CPI report was released on Tuesday. It showed that consumer prices rose 8.5% in March. That marked the highest inflation rate since 1981. Core inflation, which excludes food and energy, was up 6.5%. The core inflation rate showed that aside from food and energy inflation may be beginning to moderate. Unfortunately, with bans on Russian oil which makes up 12% of the world’s oil supply energy prices are not expected to moderate for some time. That will force prices for everything higher in the near future. The Dow Jones Industrial Average closed the week at 34,451.23, down 0.8% from 34,721.12 last week. It’s down 5.2% year-to-date. The S&P 500 closed the week at 4,392.28, down 2.1% from 4,488.28 last week. The S&P is down 7.8% year-to-date. The NASDAQ closed the week at 13,351.08, down 2.6% from 13,711.00 last week. It is down 14.7%, year-to-date. 

U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 2.83%, up from 2.72% last week. The 30-year treasury bond yield ended the week at 2.92%, up from 2.76% last week. We watch bond yields because mortgage rates often follow treasury bond yields. 

Mortgage rates – Home mortgage rates continued to increase this week. Freddie Mac Primary Mortgage Survey reported that mortgage rates as of April 14, 2022 for the most popular loan products were as follows: The 30-year fixed mortgage rate was 5.00%, up from 4.72% last week. The 15-year fixed was 4.17% up from 3.91% last week. The 5-year ARM was 3.69%, up from 3.56% last week.  

March home sales figures will be released by The California Association of Realtors and the National Association of Realtors next week. Those figures will be in next weekend’s report. You can get March sales figures for your city or zip code from my website now. The data shows the number of sales down, fewer new listings, and steep price increases. 

Happy Passover and Happy Easter to those who celebrate. Have a great weekend!

Economic update for the week ending April 9, 2022

Stock markets closed lower this week – Stock markets dropped this week mainly on interest rate fears. Minutes from the last Fed meeting were released on Wednesday. They showed that some Fed members supported a ½% rate hike, rather than the ¼% hike the Fed settled on. Other comments suggested that the Fed expected continued strength in the economy and intended to do more rate hikes and raise rates quicker than previously expected in order to keep the economy from overheating and curb inflation. First-quarter corporate profit reporting season starts next week. Analysts expect them to exceed expectations. New unemployment claims continue to hit 60-year lowsTreasury yields and mortgage rates are continuing to climb as well. While higher rates seem concerning, and they are, rates rise when the economy is strong and fall when it is not, so increasing rates point to strength in the economy. The Dow Jones Industrial Average closed the week at 34,721.12, down 0.3% from 34,818.25 last week. It’s down 4.5% year-to-date. The S&P 500 closed the week at 4,488.28, down 1.3% from 4,545.86 last week. The S&P is down 5.8% year-to-date. The NASDAQ closed the week at 13,711.00, down 3.9% from 14,261.50 last week. It is down 12.4%, year-to-date. 

U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 2.72%, up from 2.38% last week. The 30-year treasury bond yield ended the week at 2.76%, up from 2.44% last week. We watch bond yields because mortgage rates often follow treasury bond yields. 

Mortgage rates – Home mortgage rates continued to increase this week. Freddie Mac Primary Mortgage Survey reported that mortgage rates as of April 7, 2022 for the most popular loan products were as follows: The 30-year fixed mortgage rate was 4.72%, up from 4.67% last week. The 15-year fixed was 3.91% up from 3.83% last week. The 5-year ARM was 3.56%, up from 3.50% last week. 

March home sales figures will not be released by The California Association of Realtors and the National Association of Realtors until the third week of April. Those figures will be in my April 23, 2022 weekly report. You can get March sales figures for your city or zip code from my website now.

Economic update for the week ending April 2, 2022

The U.S. economy added 431,000 new jobs in March – The Department of Labor and Statistics reported that 431,000 new jobs were added in March. Economists surveyed had expected 490,000 new jobs. The unemployment rate fell to 3.6% in March, down from 3.8% in February. The labor-force participation rate (the share of workers with a job or actively looking for a job) rose to 62.4% in March, up from 62.3% in February. It is still below the 63.6% level before the pandemic but has moved up steadily as more people are returning to the workforce. Average hourly wages, an indicator of inflation increased 5.6% from March 2021.

Stock markets closed higher on Friday to erase losses earlier in the week – Stock markets began the second quarter higher after the worst-performing quarter in two years. The week ended on a positive note with unemployment dropping to historic lows, oil falling below $100 a barrel, treasury bond yields lower, and early indications of strong corporate profits – The Dow Jones Industrial Average closed the week at 34,818.25, down 0.13% from 34,861.24, last week. It is down 4.1% year-to-date. The S&P 500 closed the week at 4,545.86, almost unchanged from 4,543.06 last week. The S&P is down 4.7% year-to-date. The NASDAQ closed the week at 14,261.50, up 0.65% from 14,169.30 last week. It is down 8.8, year-to-date.

U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 2.38%, down from 2.48% last week. The 30-year treasury bond yield ended the week at 2.44%, down from 2.60% last week. We watch bond yields because mortgage rates often follow treasury bond yields.

Mortgage rates – Home mortgage rates continued to increase this week. The March 31, 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 4.67%, up from 4.42% last week. The 15-year fixed was 3.83% up from 3.63% last week. The 5-year ARM was 3.50%, up from 3.36% last week.

Economic update for the month ending March 31, 2022

Stock markets rebounded in March – Despite the first interest rate hike by The Federal Reserve since 2018, the highest inflation rates since 1982, the war in Ukraine, and spiking gas prices, stock markets made up almost all of their steep February losses. The reasons attributed to the rebound were strong job gains, robust corporate profits, an increase in retail sales, and a large drop in coronavirus cases. Treasury bond yields and mortgage rates which dropped to record lows during the pandemic rose sharply in March. They are now at their highest rates since 2018. The Dow Jones Industrial Average closed the month at 34,678.35 up 2.9% from 33,892.60 on February 28, 2022. It is down 4.6% year-to-date. The S&P 500 closed the month at 4,530.41, up 3.4% from 4,373.94 last month. It is down 5.0% year-to-date. The Nasdaq closed the month at 14,220.52 up 3.4% from 13,751.40 last month. It is down 9.1% year-to-date.

U.S. Treasury bond yields – The 10-year treasury bond closed the month yielding 2.32%, up from 1.83% last month. The 30-year treasury bond yield ended the month at 2.44%, up from 2.17% last month. We watch bond yields because mortgage rates often follow treasury bond yields.

Mortgage rates – The March 31, 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 4.67%, up from 3.89% last month. The 15-year fixed was 3.83%, up from 3.14% last month. The 5-year ARM was 3.50% up from 2.98% last month.

U.S. employers added 431,000 new jobs in March – The Department of Labor and Statistics reported that 431,000 new jobs were added in March. Economists surveyed had expected 490,000 new jobs. The unemployment rate fell to 3.6% in March, down from 3.8% in February. The labor-force participation rate (the share of workers with a job or actively looking for a job) rose to 62.4% in March, up from 62.3% in February. It is still well below the 63.6% level before the pandemic but has moved up steadily as more people are returning to the workforce. Average hourly wages, an indicator of inflation increased 5.6% from March 2021.

Monthly home sales and pricing figures are released by the California Association of Realtors and the National Association of Realtors on the third week of the month for the previous month. These are February’s results.

February U.S. existing-home sales – The National Association of Realtors reported that existing-home sales totaled 6.02 million on a seasonally adjusted annualized rate in February, down 7.2% month-over-month from the annualized rate of sales in January. Year-over-year sales were down 2.4% from the annualized rate of 6.17 million in February 2021. The median price of a home in the U.S. in January was $357,300, up 15.0% from $303,600 one year ago. February marked a record 120 consecutive months of year-over-year increases in the median price. Inventory levels remained at record lows. There was just a 1.7-month supply of homes for sale in February, down from a 2.0 month supply in February 2021. First-time buyers accounted for 29% of all sales. Investors and second-home purchases accounted for 22% of all sales. All-cash purchases accounted for 25% of all sales. Foreclosure and short-sales accounted for less than 1% of all sales remaining at a historic low.

February California existing-home sales – The California Association of Realtors reported that existing-home sales totaled 424,640 on a seasonally adjusted annualized rate in February. That marked a 4.5% month-over-month decrease from the number of homes that closed escrow in January and a year-over-year drop of 8.2%. The median price paid for an existing home in February was $771,270, up 10.3% from last February when the median price was $699,000. There was a 2-month supply of homes for sale in February, down from 2.1 months in February 2021

The chart below shows regional figures.