Category: Economic Update

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!

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 lows. Treasury 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.

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.

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.

Stock markets closed lower for a fifth straight week – The Dow fell for its fifth straight week as investors try to determine just how bad the economic impact the war in Ukraine will have on American companies. Persistent inflation which was going on well before the Russian invasion has been exuberated by soaring fuel costs as the world has partially cut off Russian oil. The February CPI report was released on Thursday. It showed that consumer prices had risen 7.9% year-over-year in February. That marks the highest inflation rate since 1982. American companies have also joined the boycott and stopped selling goods in Russia. That will impact their profits. It was a tough week for investors. The Dow Jones Industrial Average closed the week at 32,944.19, down 2.0% from 33,614.17 last week. It is down 9.4% year-to-date. The S&P 500 closed the week at 4,204.31, down 2.8% from 4,326.87 last week. The S&P is down 11.8% year-to-date. The NASDAQ closed the week at 12,843.81, down 3.5% from 13,314.44 last week. It is down 17.9%, year-to-date.

U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 2.00%, up from 1.74% last week. The 30-year treasury bond yield ended the week at 2.36%, up from 2.16% last week. We watch bond yields because mortgage rates often follow treasury bond yields.

Mortgage rates – The March 10, 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 3.85%, up from 3.76% last week. The 15-year fixed was 3.01%, up from 3.09% last week. The 5-year ARM was 2.97%, up from 2.91% last week. Following the release of the February CPI report that showed inflation had risen 7.9% year-over-year on Thursday, mortgage rates have risen sharply. The 30-year fixed rate is well over 4% today.

Home sales figures for February will be released next week by the California Association of Realtors. You can get a detailed market report for your city or zip code now from my website. It has all February home sales numbers.

It is uncomfortable making a statement that it was a tough week for investors in light of what is going on in Ukraine. It was a tragic week for Ukrainians with unimaginable death and destruction. Rodeo Realty prays for an end of the war.

Stock markets continued to fall in February – High inflation, a heated economy, and strong employment figures led investors to fear that the Fed would raise interest rates faster and higher than previously felt. Those fears drove interest rates higher on bonds and mortgages and led investors to sell stocks in fear that higher borrowing costs would lead to reduced profits. Later in the month, Russia invaded Ukraine. Sanctions placed on Russia also impacted stock markets around the world and energy prices surged. This actually caused mortgage rates and bond yields to fall in the last days of the month, as any headwind in the economy may slow the Fed’s desire to raise interest rates. The Dow Jones Industrial Average closed the month at 33,892.60, down 3.3% from 35,131.86 on January 31. It is down 6.8% year-to-date. The S&P 500 closed the month at 4,373.94, down 3.8% from 4,515.55 last month. It is down 8.2% year-to-date. The Nasdaq closed the month at 13,751.40, down 4.4% from 14,239.98 last month. It is down 12.1% year-to-date.

U.S. Treasury bond yields – The 10-year treasury bond closed the month yielding 1.83%, up from 1.76% last month. The 30-year treasury bond yield ended the month at 2.17%, up from 2.11% last month. We watch bond yields because mortgage rates often follow treasury bond yields.

Mortgage rates – The February 24, 2021 Freddie Mac Primary Mortgage Surveyreported that mortgage rates for the most popular loan products were as follows: The 30-year fixed mortgage rate was 3.89%, up from 3.55% last month. The 15-year fixed was 3.14%, up from 2.80% last month. The 5-year ARM was 2.98%, up from 2.70% last month.

The February jobs report will be released on Friday. 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 January’s results.

U.S. employers added 467,000 new jobs in January – The Department of Labor and Statistics reported that 467,000 new jobs were added in January. Economists surveyed had expected a very small increase and possibly a decrease in jobs due to the COVID surge, so this was considered a substantial spike in new jobs. The November and December new jobs numbers were also revised higher. The Labor Department has now revised the job growth in 2021 to 6.7 million new jobs added, an all-time record. The unemployment rate increased slightly to 4% in January, up from 3.9% in December, as more workers entered the workforce. The labor-force participation rate (the share of workers with a job or actively looking for a job) rose to 62.2% in January from 61.9% in December. It remains below the 63.6% level before the pandemic but finally seems to be moving up. Average hourly wages increased to $31.63 per hour, a year-over-year increase of 5.7%.

January 2022 U.S. Existing Home Sales – The National Association of Realtorsreported that existing-home sales totaled 6.5 million on a seasonally adjusted annualized rate in January, up 6.7% month-over-month from the annualized rate of sales in December 2021. Year-over-year sales were down 2.3% from the annualized rate of 6.65 million in January 2021. The median price of a home in the U.S. in January was $350,300, up 15.4% from $303,600 one year ago. January marked a record 119-straight months of year-over-year increases in the median price. Inventory levels remained at record lows. There was just a 1.6 month supply of homes for sale in January, down from a 1.9 month supply in January 2021. First-time buyers accounted for 27% of all sales, down from 33% one year ago. Investors and second-home purchases accounted for 22% of all sales, up from 17% last January. All-cash purchases accounted for 27% of all sales, up from 19% in January 2021. Foreclosure and short-sales accounted for less than 1% of all sales remaining at a historic low.

California housing affordability improved in the fourth quarter of 2021 – The California Association of Realtors published their third-quarter housing affordability report this week. They found that 25% of California households could afford to purchase a $797,470 median-priced home. That is up from 24% in the third quarter of 2021, but down from 27% in the fourth quarter of 2020. A minimum income of $148,000 was needed to qualify for the monthly payment of $3,700 which included principal, interest, and taxes on a 30-year fixed-rate mortgage at a 3.28% rate. Condominiums were more affordable. The report found that 36% of California households were able to afford a $610,350 median-priced condo or townhouse. A minimum annual income of $113,200 was needed to qualify for the monthly payment of $2,830.

January California existing-home sales – The California Association of Realtorsreported that existing-home sales totaled 444,540 on a seasonally adjusted annualized rate in January. That marked a 3.4% month-over-month increase from the number of homes that closed escrow in December 2021. The median price paid for an existing home in January was $765,580, up 9.4% from last January when the median price was $699,920. There was a 1.8-month supply of homes for sale in January, up from 1.4 months in January 2021.

Although California as a whole had a month-over-month increase in sales, Southern California saw a dramatic drop in sales. The chart below shows regional figures.

Stock markets – Stock markets dropped at the beginning of the week and dropped sharply early Thursday following Russia’s invasion of Ukraine. By Thursday afternoon stock markets recovered and ended the day higher. Stock markets rallied again on Friday as investors bought stocks that they felt were well valued due to their steep declines since the first of the year. The Dow Jones Industrial Average closed the week at 34,058.75, down 0.1% from 34,079.18 last week. It is down 6.2% year-to-date. The S&P 500 closed the week at 4,384.65, up 0.8% from 4,348.87 last week. The S&P is down 8% year-to-date. The NASDAQ closed the week at 13,694.52, up 1.1% from 13,548.07 last week. It is down 12.5% year-to-date.

U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 1.97%, up from 1.92% last week. The 30-year treasury bond yield ended the week at 2.29%, up from 2.24% last week. We watch bond yields because mortgage rates often follow treasury bond yields.

Mortgage rates – The February 24, 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 3.89%, down from 3.92% last week. The 15-year fixed was 3.14% unchanged from 3.15% last week. The 5-year ARM was 2.98%, unchanged from 2.98% last week.

January 2022 U.S. Existing Home Sales – The National Association of Realtors reported that existing-home sales totaled 6.5 million on a seasonally adjusted annualized rate in January, up 6.7% month-over-month from the annualized rate of sales in December 2021. Year-over-year sales were down 2.3% from the annualized rate of 6.65 million in January 2021. The median price of a home in the U.S. in January was $350,300, up 15.4% from $303,600 one year ago. January marked a record 119-straight months of year-over-year increases in the median price. Inventory levels remained at record lows. There was just a 1.6 month supply of homes for sale in January, down from a 1.9 month supply in January 2021. First-time buyers accounted for 27% of all sales, down from 33% one year ago. Investors and second-home purchases accounted for 22% of all sales, up from 17% last January. All-cash purchases accounted for 27% of all sales, up from 19% in January 2021. Foreclosure and short-sales accounted for less than 1% of all sales remaining at a historic low.

Stock markets ended the week lower – Stock markets dropped again last week. While investors are concerned with higher interest rates, inflation, labor and supply shortages, and possible tensions in Ukraine, it should be noted that on December 31, 2021, the NASDAQ had risen 74%, the Dow had risen 27%, and the S&P had risen 47% since December 31, 2019. Those represent pretty hefty two-year increases! Perhaps these stocks, especially the tech-heavy NASDAQ were overvalued. The Dow Jones Industrial Average closed the week at 34,079.18, down 1.9% from 34,738.06 last week. It is down 6.21% year to date. The S&P 500 closed the week at 4,348.87, down 1.6% from 4,418.64 last week. The S&P is down 8.8% year to date. The NASDAQ closed the week at 13,548.07, down 2.5% from 13,751.19 last week. It is down 13.4% year to date.

U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 1.90%, down slightly from 1.93% last week. The 30-year treasury bond yield ended the week at 2.24%, unchanged from 2.24% last week. We watch bond yields because mortgage rates often follow treasury bond yields.

Mortgage rates – The February 17, 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 3.92%, up from 3.69% last week. The 15-year fixed was 3.15%, up from 2.93% last week. The 5-year ARM was 2.98%, up from 2.80% last week.

January California existing-home sales – The California Association of Realtors reported that existing-home sales totaled 444,540 on a seasonally adjusted annualized rate in January. That marked a 3.4% month-over-month increase from the number of homes that closed escrow in December 2021. The median price paid for an existing home in January was $765,580, up 9.4% from last January when the median price was $699,920. There was a 1.8-month supply of homes for sale in January, up from 1.4 months in January 2021.

Although California as a whole had a month-over-month increase in sales, Southern California saw a dramatic drop in sales. The chart below shows regional figures

 

Stock Markets – The Dow and S&P closed the week higher while the tech-heavy Nasdaq closed sharply lower. Corporate profits have been strong and it seems like the market has priced in higher interest rates. We are not seeing the volatility that we saw in early January. Technology has been a different story and investors have pulled back on the sector in fear that evaluations hit an unrealistic level. A stellar jobs report on Friday was also a mixed bag. It confirmed to investors that the economy was very strong. Despite a surge in COVID cases in January the job gains that month show that the economy is also resilient. On the flip side, with the economy so strong the chance of the Fed raising interest rates quicker and higher becomes greater. Bond yields and mortgage rates rose sharply following the release of the jobs data. The Dow Jones Industrial Average closed the week at 35,089.74, up 1.0% from 34,725.47 last week. It is down 3.4% year to date. The S&P 500 closed the week at 4,500.94, up 1.6% from 4,431.94 last week. The S&P is down 5.6% year to date. The NASDAQ closed the week at 14,098.01, down 2.5% from 14,454.61 last week. It is down 9.9% year to date. 

U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 1.92%, up from 1.78% last week. The 30-year treasury bond yield ended the week at 2.23%, up from 2.07% last week. We watch bond yields because mortgage rates often follow treasury bond yields. 

Mortgage rates – The February 3, 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 3.55%, unchanged from 3.55% last week. The 15-year fixed was 2.77%, down slightly from 2.80% last week. The 5-year ARM was 2.71%, almost unchanged from 2.70% last week. Unfortunately, after the release of the jobs report rates increased on Friday. Next week’s rates will be higher. 

U.S. employers added 467,000 new jobs in January – The Department of Labor and Statics reported that 467,000 new jobs were added in January. Economists surveyed had expected a very small increase and possibly a decrease in jobs due to the COVID surge, so this was considered a substantial spike in new jobs. The November and December new jobs numbers were also revised higher. The Labor Department has now revised the job growth in 2021 to 6.7 million new jobs added, an all-time record. The unemployment rate increased slightly to 4% in January, up from 3.9% in December, as more workers entered the workforce. The labor-force participation rate (the share of workers with a job or actively looking for a job) rose to 62.2% in January from 61.9% in December. It remains below the 63.6% level before the pandemic but finally seems to be moving up. Average hourly wages increased to $31.63 per hour, a year-over-year increase of 5.7%.

Stock markets ended the week higher after three straight weeks of losses – The fourth-quarter GDP figure was announced Thursday. The Gross Domestic Product (GDP) is the broadest measurement of the health of the economy. It represents the value of all goods and services produced within the U.S. The fourth-quarter GDP increased 6.9% year-over-year. That was a welcome rebound from a disappointing 2.3% growth figure in the third quarter. For the entire year of 2021, the annualized GDP was up 5.7%, the highest increase since 1984. Reporting of fourth-quarter corporate earnings has begun. Corporate profits are coming in higher than expected. While bond and mortgage rates have risen sharply, investors feel that they are beginning to level out and the expected future increases by the Fed are already built into the current rates. The Dow Jones Industrial Average closed the week at 34,725.47, up 1.3% from 34,265.37 last week. It is down 4.4% year to date. The S&P 500 closed the week at 4,431.35, up .08% from 4,397.94 last week. The S&P is down 7.1% year to date. The NASDAQ closed the week at 14,454.61, up 5% from 13,758.92 last week. It is down 7.6% year to date. 

U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 1.78%, almost unchanged from 1.75% last week. The 30-year treasury bond yield ended the week at 2.07%, unchanged from 2.07% last week. We watch bond yields because mortgage rates often follow treasury bond yields. 

Mortgage rates – The January 27, 2022 Freddie Mac Primary Mortgage Survey reported mortgage rates for the most popular loan products as follows: The 30-year fixed mortgage rate was 3.55%, unchanged from 3.56% last week. The 15-year fixed was 2.80%, unchanged from 2.79% last week. The 5-year ARM was 2.70%, also unchanged from 2.69% last week. 

U.S. Home Sales – The National Association of Realtors reported that existing-home sales totaled 6.21 million in 2021, up 8.3%from the number of homes sold in 2020. That represented the most homes sold in a year since 2006. The median price of a home ended the year 15.8% higher than at the end of 2020. December marked a record 118-straight months of year-over-year increases in the median price paid for a home in the United States. Inventory levels also hit a record low. Inventory levels ended 2021 with 14.2% fewer homes for sale than the number of homes for sale at the end of 2020. There was just a 1.8 month supply of homes for sale on December 31, 2021, an all-time low.