Category: Economic Update

Stock markets drop over 10% in two weeks – A 10% drop officially is termed “a correction.” This week was a very volatile week for stocks. The markets had the two highest point drops ever this week. There were several reasons experts cited. Some experts feel that stocks were simply overbought and had just risen too high too quickly.  Some said that the administration promoting the rise in stocks may have oversold the strength, which is now correcting. Interest rates were also a concern, as higher rates increase borrowing costs to companies. The reason rates are rising is because investors are  fearing higher inflation. They feel that the tax cuts basically stimulates the economy at a time when the economy is already quite strong. Usually, tax cuts occur when the economy is slow to try to stimulate it. The budget passing today has also been a concern as it massively increased spending. The increased spending will also stimulate the economy. At a time when unemployment is at a 17 year low and the economy is strong, it is feared that the tax cuts and extra spending will overheat the economy causing inflation, which increases interest rates. Both the extra spending and tax cuts also explode an already high deficit, which will increase the amount of bonds the government will need to sell to fund the deficit spending. This will also drive rates higher. Lastly, Jerome Powell took over Monday as the new Chairman of The Federal Reserve. It is widely felt that Mr. Powell is more adverse to the risk of inflation than Janet Yellen, his predecessor, and plans to increase rates at a quicker pace than Ms. Yellen would have. The Dow Jones Industrial Average closed the week at 24,190.90, down from last week’s close of 25,520.96. After dropping 5.2% this week and 4.1% last week, it’s now down 2.1% year-to-date. The S&P 500 closed the week at 2,619.55, down from 2,762.13 last week. It lost 5.2% this week and 3.9% last week. It’s down 2% year-to-date. The NASDAQ closed at 6,874.49, down from 7,240.95 last week. It dropped 5.1% this week, after falling 3.5% last week. It is down 0.4% year-t- date.

Treasury Bond Yields –  The 10-year treasury bond closed the week yielding 2.83%, almost unchanged from 2.84% last week. The 30-year treasury bond yield ended the week at 3.14%, up from 3.08% last week. We watch bond rates because mortgage rates follow bond rates.

Mortgage rates higher this week – The February 8, 2018 Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 4.33%, up from last week’s 4.22%. The 15-year fixed was 3.77%, up from 3.68% last week. The 5-year ARM was 3.57%, up from 3.53% last week.

Have a great weekend,

Syd

Stocks having record January – Stocks rallied to new highs again this week, as a number of companies reported higher than expected earnings. As well as posting solid fourth quarter earnings, they provided optimistic guidance regarding their outlook for 2018. Companies included the tax savings under the recently passed tax reform, a stronger domestic and world economy, and increased consumer spending as factors for their higher outlooks. The Dow Jones Industrial Average closed the week at 26,616.71, up from last week’s close of 26.071.72. It’s up 7.7% year-to-date. The S&P 500 closed the week at 2,872.77, up from 2,810.30 last week. It is up 7.5% year-to-date. The NASDAQ closed at 7,507.77, up from 7,336.38 last week. It is up 8.7% year-to-date.

Treasury Bond Yields – The 10-year treasury bond closed the week yielding 2.66%, up just slightly from 2.64% last week. The 30-year treasury bond yield ended the week at 2.91%, unchanged from 2.91% last week. We watch bond rates because mortgage rates follow bond rates.

Mortgage  rates higher this week – Although inflation has remained tame, rates have risen in recent weeks. Fixed rates follow corresponding bonds. For example, the 30-year fixed follows 30-year bond yields. Usually, long term bonds follow inflation, but bonds also attract investors looking for lower risk. With stocks soaring, many investors have moved money from low risk, low return bonds to stocks. Lower demand for bonds have driven yields up. If stocks begin to drop and inflation remains tame, I’d expect rates to settle in a little lower. Rates are still near historic lows. The January 25, 2018 Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 4.15%, up from last week’s 4.04%. The 15-year fixed was 3.62%, up from 3.49% last week. The 5-year ARM was 3.52%, up from 3.46% last week.

2017 Gross Domestic Product – The Commerce Department reported it’s first estimate of the nation’s fourth quarter GDP growth at 2.6%. Experts had forcasted growth at 3%, so this initial estimate was disappointing. The initial estimate is often revised. For the year, the nation’s $17 trillion economy recovered from a slow start in the first quarter where GDP growth was just 1.4%, it grew to 3.1% in the second quarter, 3.2% in the third quarter, and ended the year at 2.6% in an initial estimate. Those quarterly rates are annualized, so if the initial estimate is not revised much the growth rate would be about 2.6% for the entire year.

Consumer spending higher in fourth quarter – Consumer spending, which is the biggest contributor to the economy,  grew at a 3.8% pace, its fastest pace in more than a year. Growth was partly driven by the strongest holiday shopping season in several years, according to data from Mastercard SpendingPulse. Business spending on large equipment also added to growth.

California existing home sales and prices increase in 2017 – The California Association of Realtors reported that existing single-family home sales totaled 423,760 in 2017, up 1.4% from 2016 when 417,720 closed escrows were reported. The median price paid for a home in California was $549,560, up 7.6% for 2017. Housing inventory, which had been at historically low levels, dropped even further. The unsold inventory index revealed that there was just a 2.5-month supply of homes in the market in December, the lowest monthly reading in 13 years. The number of homes for sale in 2017 was 12% below that of 2016. Los Angeles County saw a higher increase in prices than the state as a whole due to tighter inventory levels.  The median price in Los Angeles County increased 10.6% in 2017, while the number of sales dropped 7.3%. 

U.S. existing home sales highest in 11 years – The National Association of Realtors reported that the number of existing homes sold in 2017 increased 1.1% from 2016 to the highest level in 11 years. The median price was $246,800, a 5.8% increase from last December. Total housing inventory was 11.4% lower in December, compared to December 2016. There was a 3.2-month supply in December, down from a 3.6-month supply last December. It marked the lowest inventory level since NAR began tracking monthly inventory supply. Existing home sales include all sales of residential homes, condominiums, town-homes and co-ops reported to member associations throughout the country.

2017 new home sales highest in 10 years  – The Commerce Department reported that although the number of new homes sold in the U.S. dropped in December, new home sales increased 8.3% in 2017. The number of new homes sold hit a 10-year high in 2017. 

Have a great weekend,

Syd Leibovitch

Stocks end week again at record highs – Stock markets closed at record highs again this week, as more companies released the amount of tax savings under the new tax code. Apple announced that the reduction from 35% to 21% will save them over $45 billion in 2018. Last week, Wells Fargo announced that their savings would be $3.35 billion. Earnings for the fourth quarter of 2017 will begin to be released next week. GE, unlike other Dow Jones stocks, dropped 14% this week. It’s down 48% in a year, while the Dow is up 31% over the same period. The Dow Jones Industrial Average closed the week at 26,071.72, up from last week’s close of 25,804.19. The S&P 500 closed the week at 2,810.30, up from 2,786.24 last week. The NASDAQ closed at 7,336.38, up from 7,261.06 last week.

Treasury Bond Yields – The 10-year treasury bond closed the week yielding 2.64%, up from 2.55% last week. The 30-year treasury bond yield ended the week at 2.91%, up from 2.85% last week. We watch bond rates because mortgage rates follow bond rates. Because bonds rose again this week we expect mortgage rates to be slightly higher next week.

Mortgage  rates higher this week – The January 18, 2018 Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 4.04%, up from last week’s 3.99%. The 15-year fixed was 3.49%, up from 3.44% last week. The 5-year ARM was 3.46%, unchanged from 3.46% last week.

California ends 2017 with the unemployment rate at a record low – The California Employment Development Department reported that the unemployment rate in California dropped to 4.3% in December. That marks the lowest unemployment rate since the current system of counting the rate began in 1976. California employers’ added 52,700 non-farm jobs in December, bringing the number of jobs added in 2017 to 342,500. In December, 2016 California’s unemployment rate was 5.2%. California has now added 2,793,800 since the expansion began in 2010, when the state’s unemployment rate peaked at 12.4%.

December housing sales figures will be out next week. They will be included in next week’s report. A 2017 year-end report will go out as soon as we have those final housing sales and price figures.

Have a great weekend,

Syd

Stocks continued to rally this week –  On Friday, The Dow gained 228 points after Wells Fargo announced that the new tax law would result in a $3.35 billion tax reduction. As companies estimate the tax savings, investors are seeing the magnitude in which profits will increase due to a reduction from 35% to 21% in corporate tax income, easing regulation, and other incentives. Oil prices also rose to the highest level in two years, which helped energy stocks. The Dow Jones Industrial Average closed the week at 25,804.19, up from last week’s close of 25,295.87. The S&P 500 closed the week at 2,786.24, up from 2,743.15 last week. The NASDAQ closed at 7,261.06, up from 7,136.56 last week.

Treasury Bond Yields – It was a wild week for treasuries. On Wednesday, a Chinese banking official made a comment that they were going to cut back on buying U.S. debt and rates rose. Later that afternoon, an unofficial source said that the bankers comments were not the policy of the central bank. By Friday, a Chinese official made an official statement that The Chinese Central bank was not going to cut back on U.S. debt and bonds settled, but ended the week higher than the previous week. The 10-year treasury bond closed the week at 2.55%, up from 2.47% last week. The 30-year treasury yield ended the week at 2.85%, up from 2.81% last week. We watch bond rates because mortgage rates follow bond rates. We expect mortgage rates to be slightly higher next week.

Mortgage Rates – The January 11, 2018 Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 3.99%, about the same as last week’s 3.95%. The 15-year fixed was 3.44%, up from 3.38% last week. The 5-year ARM was 3.46%, also almost unchanged from 3.45% last week.

Stricter rent control bill defeated – A bill in the California Assembly, that would have eliminated restrictions on local cities, was defeated this week. Real estate groups were against the bill that would have eliminated the current California law, which limits how restrictive rent control ordinances could be. They argued that landlords would not be encouraged to keep apartment buildings, many have been torn down and converted to condominiums, if this bill passed. They also argued that there will be less incentive to build rental housing, which already has a shortage.

Have a great weekend!

Syd

Employers add 148,000 new jobs in December – The Department of Labor Statistics reported that 148,000 new jobs were added in December. That fell short of the 190,000 that economists expected. The unemployment rate remained at 4.1%, a 17-year low. With such low unemployment, investors were not at all concerned with fewer jobs added than expected, as so many jobs have been added over the past 5 years. Average hourly wages grew a modest 2.5% year-over-year in December, which was the same as in November. Although not the wage gains expected in an economy with such a low unemployment rate, 2.5% is higher than we have seen for several years. This was seen as a bright spot in the jobs report.

Stocks begin 2018 higher as rally continues –  Stock markets all climbed again to record highs with the Dow breaking 25,000 for the first time and then rising almost another 300 points. The Dow rose 577 points this week, a 2% increase. The Dow Jones Industrial Average closed the week at 25,295.87, up from last week’s close of 24,719.22. The S&P 500 closed the week at 2,743.15, up from 2,673.51 last week. The NASDAQ closed at 7,136.56, up from 6,903.39 last week.

Treasury Bond Yields – The 10-year Treasury bond closed the week at 2.47%, up from 2.40% last week. The 30-year treasury yield ended the week at 2.81%, up from 2.74% last week. We watch bond rates because mortgage rates follow bond rates. We expect mortgage rates to be slightly higher next week.

Mortgage Rates – The January 4, 2018 Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 3.95%, about the same as last week’s 3.99%. The 15-year fixed was 3.38%, down from 3.44% last week. The 5-year ARM was 3.45%, also almost unchanged from 3.47% last week.

Have a great weekend!

Syd

This 2017 year end is preliminary. I will prepare a more detailed year end report on the third week of January when we have final housing sales figures for 2017, employment figures, and GDP numbers. 

Stocks had a banner year –  U.S. stock markets closed the year with 2017 achieving the highest percentage gains since 2013. The big difference is that in 2013 stocks were recovering from huge drops during the recession, while in 2017 stock markets gained from record highs reached in 2016, which makes the 2017 gains even more remarkable. As the worldwide economy improved, international stocks fared even better, outperformed U.S. stock market gains for the first time since 2012. U.S. markets were helped by hopes of a massive corporate tax rate cut, which was finalized at the end of the year, loosening regulation, and a turnaround in the worldwide economy, which was sluggish in 2015 and 2016. The Dow Jones Industrial Average closed the year at 24,719.22, up 25.1% from 19,762.60 at the close of 2016. The Dow closed at 17,425.03 in 2015. The S&P 500 closed the year at 2,673.51, up 19.4% from  2,238.83 at the end of 2016. It was 2,043.94 at the end of 2015.  The NASDAQ closed at 6,903.39, up 28.2% from 5,383.12 on December 31, 2016. It was 5,007.41 at the end of 2015. 

The 10-year Treasury bond closed the year at 2.40%, down from 2.45% December 31, 2016. It was 2.27% at the end of 2015. The 30-year treasury yield ended the year at 2.74%, down from 3.08% on Dec. 31, 2016. It was 3.01% on December 31, 2015.

Mortgage Rates mixed in 2017 – The 30-year and 15-year fixed rate mortgages were lower this year than at the end of 2016. The short them ARM rates were higher. The Federal Reserve raises overnight rates banks pay three times in 2017, a .75% increase. That caused short term rates to rise, but did not cause long term rates to rise. That is because long term rates are tied to inflation, not short term rates. In fact, higher short term rates lower the risk of inflation. The December 28, 2017 Freddie Mac Primary Mortgage Survey reported that the 30 year fixed mortgage rate average was 3.99%, down from 4.32% on December 29, 2016. It was 4.01% at the end of 2015. The 15-year fixed was 3.44%, down from last December 28’s 3.55%. It was 3.24% at the end of 2015. The 5-year ARM was 3.47%, up from 3.30% at the close of 2016. It was 3.08% at end of 2015. 

U.S. Retail Holiday sales up 4.9% – MasterCard reported that holiday retail sales, which compares retail sales from November 1 to December 24, increased 4.9% from the same period last year. Online retail shopping similarly increased 18.1%, while overall consumer buying during the holiday period set a record for dollars spent, according to the sales report issued by Mastercard SpendingPulse.

The number of California home sales and prices increase in November – The California Association of Realtors reported that existing single-family home sales totaled 440,340 in November on a seasonally adjusted annualized rate. That marked an increase of 2.1%  from October, yet down down 0.8% from November 2016. Year to date sales are 1.1% higher than the same period last year.  The median price paid for a home in California was $546,820, in November, up 8.8% from last November. Housing inventory which had been at historically low levels dropped even further. The unsold inventory index revealed that there was just a 2.9 month supply of homes in the market in November.  The number of homes for sale in November was 11.5% below last November’s number.

My predictions for 2018.

Tax reform – Many people have contacted me about how I feel about the new tax reform and how will it affect the real estate market.

Most of the concern is over the $10,000 deduction cap on SALT, which stands for state and local taxes. These state and local taxes include: state income tax, property tax, sales tax, DMV fees, etc. Many fear what this limit will do to the real estate market, especially the upper end of the market. I think we were all blindsided by this. Nobody would have expected state and local tax deductions, which were unlimited before, to be capped. It is something that has never been proposed before. As a real estate broker, I’m against anything that takes away benefits of home ownership, but I think the housing market has so much momentum that prices and sales numbers will continue to rise. The reduction in the mortgage interest deduction from the interest on a $750,000 from a $1,000,000 loan also is unfortunate, but I don’t expect that to have much affect either. (Interest deduction on mortgages up to $1,000,000 originated before December 14, 2017, and the refinance of those loans will still remain deductible). I do expect the $10,000 combined limit on state and local taxes, and the reduction in the mortgage interest deduction to affect us in times of real estate recessions. It could make those periods more severe.

Home prices – I expect home prices to increase in 2018. Conservatively, I expect prices to increase 5%-10%.  Homes near median price range in each area will move up more than homes above the median price range.  As we get to the higher priced homes in each area I’d expect prices to move up more slightly.  Since 2012 the higher price ranges have moved up more than the median priced and lower homes, that’s beginning to change. We see some homes sitting in the very highest price ranges in each area. On those high priced homes we are seeing an oversupply due to lots of new construction.  I would expect those homes to increase in prices at a very low percentage. Many of those homes are triple where they would have been at the 2006 peak near the end of the last cycle, while homes at the median price are just now about 15% above their 2006 peak.

Mortgage rates – I would expect the 30-year fixed interest rate to remain between the 4% and 4.75%. Tame inflation should keep these rates near historic lows. I would not be surprised to see an inverted yield where short term adjustable rate mortgages rise to almost the same rate as a 30-year fixed.

Number of sales – We don’t have final figures for 2017 yet, but the total California resales will be above 440,000 units.  2017 will be the the second highest number of sales in the state ever. Only below 2006 when subprime made everyone qualified to buy. I’d expect 2018 sales to be about the same number, possibly a little more. 

Home inventory levels – 2016 marked the lowest inventory levels since The California Association of Realtors began keeping records. 2017 was even lower and averaged about 11% fewer homes for sale each month compared to the same month in 2016. Most months saw under a 3 month supply of housing for sale. That’s an unheard of number. It gave the appearance that there was nothing to buy, but that is just not the case. There were enough homes listed for 2017 to be almost the highest number of sales ever. Buyers just had no time because homes were selling so quickly. I think inventory levels will tick up a little. Perhaps more sellers will begin to think we are closer to the top of the market and put their home up for sale. A normal market has a 6-7 month supply. In a normal market prices are stable. I don’t expect to get to a 6-7 month supply anytime soon. That’s why I fully expect prices to continue to rise.

Easier to qualify – Loans in 2017 were easier to qualify for than they have been since anytime after the financial crisis. Loans required lower down-payments and lower credit scores than anytime since 2007.  With a new head of The Consumer Financial Protection Board, who has promised to roll back some regulations and loosen up requirements, qualifying for a mortgage will get even easier.

I wish you a happy, healthy, and prosperous new year!

Syd

Stocks up as corporate tax cut becomes official – On Friday, President Trump signed a tax reform bill. Key to that bill was a reduction in the corporate income tax rate, which lowers rates corporations pay from 35% to 21%. The hope is that lower corporate rates will encourage businesses to remain in the U.S., and perhaps it will encourage companies to return the the U.S. Stocks have had a record year as investors have speculated that this massive corporate tax cut would happen. Now it officially has. The Dow Jones Industrial Average ended the week at 24,754.06, up from 24,651.74 last week. It’s up 25.3% year-to-date. The S&P 500 closed the week at 2,683.34, up from its close last week of 2,675.81. The S&P is up 19.9% year-to-date. The NASDAQ closed the week at 6,959.26, up from its last week’s close of 6,936.58. It is up 29.3% year-to-date.

Bond yields rise – The 10-year Treasury bond closed the week at 2.48%, up from 2.35% last week. The 30-year treasury yield ended the week at 2.83%, up from 2.68% last week. Home mortgage rates increased proportionally to bond rates.

Mortgage Rates rise to end the week near the highest levels of the year- The December 21, 2017 Freddie Mac Primary Mortgage Survey, which gathered information from December 13-20, reported that the 30-year fixed mortgage rate average was 3.94%, unchanged from 3.93% last week. The 15-year fixed was 3.38%, unchanged from 3.36% last week. The 5-year ARM was 3.39%, unchanged from last week’s 3.36%. Unfortunately, rates rose Thursday and Friday. Rates are over 1/8% higher now than the survey rates. The 30-year fixed is now over 4%. It’s about as high as we have seen this year.  Next week’s survey will reflect this. 

The number of California home sales and prices increase again in November – The California Association of Realtors reported that existing single-family home sales totaled 440,340 in November on a seasonally adjusted annualized rate. That marked an increase of 2.1% from October, yet down 0.8% from November 2016. Year-to-date sales are 1.1% higher than the same period last year. The median price paid for a home in California was $546,820 in November, up 8.8% from last November. Housing inventory, which had been at historically low levels, dropped even further. The unsold inventory index revealed that there was just a 2.9 month supply of homes in the market in November. The number of homes for sale in November was 11.5% below last November’s number.

California’s unemployment rate drops to 40 year low in November – The Employment Development Department reported that California employer’s added 47,400 new jobs in November. The unemployment rate fell from 4.9% in October to 4.6% in November. That marked the lowest unemployment rate since the state changed the way it calculates the rate in 1976. 

Have a great weekend and I wish you happy holidays!

Syd 

As a tax reform deal gets closer, stocks continue to skyrocket – Stock markets continued to rise this week as Congress announced that they have finalized a deal on tax reform. Friday they said they had the votes to approve it and would vote next week. The Federal Reserve raised its benchmark interest rates for the third time this year citing the strength of the economy. The Dow Jones Industrial Average ended the week at 24,651.74, up from 24,326.16 last week. It’s up 24.7% year-to-date. The S&P 500 closed the week at 2,675.81, up from its close last week of 2,651.50. The S&P is up 19.5% year-to-date. The NASDAQ closed the week at 6,936.58, up from its last week’s close of 6,840.08. It is up 28.9% year-to-date.

Bond yields end week almost the same as last Friday – The 10-year Treasury bond closed the week at 2.35%, down from 2.38% last week. The 30-year treasury yield ended the week at 2.68%, down from 2.77% last week

Mortgage Rates slightly higher – The December 14, 2017 Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 3.93%, unchanged from 3.94% last week.  The 15-year fixed was 3.36%, unchanged from 3.36% last week. The 5-year ARM was 3.36%, unchanged from last week’s 3.35%.

Tax reform clears another hurdle as the Senate and House reconcile their bills and agree on a compromise bill – There still needs a final vote in the Senate and House, followed by a signature by President Trump, but both chambers announced Friday that they had the votes and would vote next week. The final bill has a reduction in the corporate tax rate from 35% to 21%. It also reduces all individual tax bracket rates with the top rate capping out at 37%, a 2.7% reduction. It doubles the exempt amount for estate tax and it lowers the amount of AMT (alternative minimum tax). The standard deduction for people that don’t itemize has been almost doubled to $12,000 for individuals, and $24,000 for married couples. To pay for the tax cuts many deductions have been cut back or eliminated. As it relates to real estate some are: a reduction in the mortgage interest deduction from the interest paid on up to $1,100,000 in mortgage loan amount to the interest paid on up to a $750,000 loan. (This applies to new loans. An existing loan up to $1,000,000 is grandfathered in). The deduction on state and local tax paid, which includes property tax will be capped at $10,000 a year. This has been unlimited since congress approved an income tax in 1909. Currently the ability to get a $250,000 per individual, or $500,000 per married couple tax free gain forgiveness on a primary residence sale requires that you live in the home for 2 out of the last 5 years. This is proposed to go to 5 years out of 8 years. Realtor organizations are still trying to get this change eliminated before a final vote. Unfortunately, many in high tax rate states like California will actually pay more in federal income tax according to experts, because of the $10,000 cap on the state and local tax deduction.

Federal Reserve raises overnight rates – The Fed announced that it has raised their key interest rates for a third time this year, citing that a healthy economy called for another rate increase. The Fed dropped rates quickly beginning in 2007 to try to stimulate the economy before and during the Great Recession. By 2009 they had dropped the rate so many times it got to 0% for the first time in the history of the Fed.  It remained at 0% until 2015 when the economy had picked up and it was raised 1/4%. It was raised 1/4% two more times in 2016, and three more times this year as the economy has rebounded. The  Federal Funds and Discount Rate now stand at 1.5%, still a historic low. The 10-year and 30-year treasury bond yield and the 30-year fixed rate mortgage interest rate actually dropped after the announcement, as raising short term rates lowers the risk of inflation, which affects long term rates.

U.S. Economy adds 228,000 new jobs in November – The Labor Department reported that 228,000 net new jobs were added in November. That beat analysts expectations of 195,000 new jobs. The unemployment rate held at 4.1%, a 17 year low. Average hourly wages rose just 2.5% from one year ago. Wage gains have been sluggish for several years. Experts had hoped that a tighter labor market would result in higher wages. The Fed has a 3% target on wage gains. Nothing in this report is expected to change their policy of slowly raising overnight rates, according to experts.

Stocks mostly higher – Stocks rose slightly this week as investors digested what a final tax reform bill would look like. It appears that the Senate and House are getting close to a final version. Wall Street is focused on the corporate tax rate. While last Friday a reduction from 35% to 20% seemed like a done deal, President Trump said Monday that he would settle for a 22% corporate rate. Stocks dropped because this took investors by surprise. He previously said he would not accept a corporate tax rate above 20% and that was an area in which the House and Senate bills were in agreement. By the end of the week it appeared that the corporate rate would end up at 20% and stocks rebounded. The November jobs report, which was released on Friday, also added to investor confidence as the economy added 228,000 new jobs. The analysts expectations were 195,000 new jobs. The Dow Jones Industrial Average ended the week at 24,326.16, up from 24,231.59 week. It’s up 23.1% year-to-date. The S&P 500 closed the week at 2,651.50, up from its close last week of 2,642.32. The S&P is up 18.4% year-to-date. The NASDAQ closed the week at 6,840.08, down from its last week’s close of 6,847.59. It is up 27.1% year-to-date.

Bond yields end week almost the same as last Friday – The 10-year Treasury bond closed the week at 2.38%, unchanged from 2.37% last week. The 30-year treasury yield ended the week at 2.77%, unchanged from 2.76% last week.

Mortgage Rates slightly higher – The December 7, 2017 Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 3.94%, up from 3.90% last week. The 15-year fixed was 3.36%,  up  from 3.30% last week. The 5-year ARM was 3.35%, up from last week’s 3.32%.

Confirming and FHA loan limits increase –  The confirming loan limit will increase from $424,100 to $453,100. The conforming high balance will go from 636,150 to $679,650 in 2018. The FHA loan limit will also rise to $679,650. Both conforming and FHA limits increase for 2,3 and 4 unit dwellings.

Have a great weekend,

Syd