home sales Archives - Rodeo Realty

April 30, 2016

Economic update for the week ending April 30, 2016

Stocks down after two weeks of solid gains – A disappointing U.S. first quarter GDP report, and a weaker than expected consumer sentiment reading from The University of Michigan were some of the factors which drove stocks down this week. The Dow Jones Industrial Average closed the week at 17,763.64, down from 18,003.75 last week. The S&P 500 closed the week at 2,065.30, down from 2,091.58 last week. The NASDAQ closed Friday at 4,775.36, down from 4,906.23 last week.

Bond yields slightly lower – The 10 year U.S. Treasury bond closed Friday yielding 1.83%, slightly down from 1.89% last week. The 30 year U.S. Treasury bond closed Friday yielding 2.66%, also slightly lower than 2.70% last week. Mortgage rates follow bond yields so we watch bonds carefully.

Federal Reserve officials left interest rates unchanged – In a statement Wednesday after a two-day meeting, the Fed stuck to its longstanding plan to move carefully on raising the benchmark federal-funds rate. The Fed has held the federal-funds rate between 0.25% and 0.50% since December, it’s first interest rate hike since 2006. The Fed dropped the rate and held it to near zero since 2008. Policy makers want to give themselves room to act at their June 14-15 gathering should they see enough encouraging developments, without signaling to investors that action is likely. Among the concerns: lingering worry over low inflation at home, slow-growing overseas economies and the potential British exit from the European Union. The Fed’s caution underscores how policy makers still lack confidence they can move away from extraordinary easy-money policies without undermining the fragile U.S. expansion and knocking the global economy off balance. Officials have already backed off the expected pace of four rate increases this year amid economic sluggishness. Policy makers on Wednesday pointed to a U.S. economy that is performing well in some respects but continuing to struggle in others. “Labor market conditions have improved further even as growth in economic activity appears to have slowed,” the statement said. It noted household spending has diminished even though real income has risen and consumer sentiment remains high.

First quarter gross domestic product disappointing – U.S. GDP posted its weakest showing since the first quarter of 2014, with an annualized growth rate of 0.5% for the first quarter of 2016. A slow first quarter has been something of a pattern in recent years, followed by a pickup in later quarters. Economists were divided over whether the details of today’s report imply a second-quarter bounce back. While the overall report was weak, housing was one sector that posted very good results. The housing sector was up 14.8%.

U.S. Pending Home Sales at one year high – The National Association of Realtors reported that the number of homes that went under contract in March reached the highest level in nearly a year. They felt this was a sign the housing market is gaining steam as Americans benefit from historically low interest rates and steady job growth. Pending sales of previously owned homes, reflecting contract signings, rose 1.4% in March from February. The pickup in pending sales is the latest sign the housing market continues to advance after posting solid growth in 2015. Pending sales in March climbed 1.4% compared with a year earlier. A more closely watched measure of the housing market is the NAR’s report on existing-home sales, which measure closed transactions. Existing-home sales—or all purchases of previously owned single-family homes, town homes, and condominiums—rose 5.1% in March from February to an annual rate of 5.33 million, the NAR reported earlier this month. Sales were up 1.5% from the prior year. Existing homes represent roughly 90% of the market.

Consumer confidence lower in April – The University of Michigan released its April consumer sentiment index. It fell to 89.0 from 91. The index is now 7.2% lower than its level one year ago. In a release the survey director, Richard Curtin stated that “the negative views of the future may be in part due to the presidential campaign.” He also wrote that, “the size of the decline, while troublesome, is still far short of indicating an impending recession.”

Mortgage rates slightly higher this week – The Freddie Mac Primary Mortgage Survey released on April 28, 2016 showed that average mortgage rates from lenders surveyed for the most popular mortgage products were as follows: The 30-year fixed rate average was 3.66%. The 15-year fixed average rate was 2.89%. The 5/1 ARM average rate was 2.86%.

Have a great weekend,
Syd

April 2, 2016

Economic update for the week ending April 2, 2016

U.S. economy gains 215,000 jobs in March – Employers added 215,000 net new jobs in March. This was considered a healthy number which beat economists’ expectations of 199,000 jobs. Almost all sectors saw healthy job gains with the exception of manufacturing which lost 29,000 jobs. This was a troubling part of the report as it was hoped that manufacturing which has been hurt by a strong dollar and sluggish economic conditions overseas was starting to improve. Nevertheless the report was met positively and stocks rose upon its release. Wages continued to show sluggish growth, rising just 2.3% from last March. It’s unusual to have such strong job growth with such weak wage growth. The unemployment rate ticked up, rising from 4.9% in February to 5% in March. This was actually seen as a positive as more workers entered the workforce who had previously given up on finding a job.

Stocks higher this week – Stocks gained midweek after Fed chairwoman Janet Yellen, commented that The Fed will raise rates at a slow pace. This followed comments last week by members of the Fed’s open market committee that the next rate rise could come this month. Those comments caused bond rates to rise and stocks to fall. Yellen’s comments this week made investors feel rates were not raising soon which caused rates to fall and stocks to rise. The next Fed meeting is April 26 – 27. It will be interesting to see what comes out of that meeting. A strong jobs report also rallied the markets on Friday. The Dow Jones Industrial Average closed the week at 17,972.75, up from 17,515.33 last week. The S&P 500 closed the week at 2,072.78, up from 2,035.94 last week. The NASDAQ closed Friday at 4,914.54, up from 4,773.50 last week.
Bond yields lower for the week – The 10 year U.S. Treasury bond closed Friday yielding 1.79%, down sharply from 1.91% last week. The 30 year U.S. Treasury bond closed Friday yielding 2.62%, down from 2.67% last week. Mortgage rates follow bond yields so we watch bonds carefully.

Mortgage rates -The Freddie Mac Primary Mortgage Survey released on March 31, 2016 showed that average mortgage rates from lenders surveyed for the most popular products were as follows: The 30 year fixed average rate was 3.71%. The 15 year fixed average rate was 2.98%. The 5/1 ARM average was was 2.90%.

Pending home sales rise – The National Association of Realtors announced that pending home sales rose 3.5% in February to the highest level in seven months. The California Association of Realtors released their February pending home sales report. In California pending home sales rose 26.4% from a disappointing January. Year over year pending existing home sales 0.4% below last February’s levels.

March 26, 2016

Economic update for the week ending March 26, 2016

Stocks slightly lower this week – Stocks pulled back after five members of The Federal Reserve’s Open Market Committee suggested that the next rate hike could come as early as the April meeting. This was a change to the statements made just a month ago when the economy seemed like it was faltering. Over the last six weeks stocks have rebounded. The 2015 4th quarter U.S GDP has been revised upward twice, auto sales were a record high, and consumer spending was higher than expected. Job gains were especially strong in February after a disappointing January. The general mood of economists has shifted from the economy possibly slowing to the economy is still expanding over the past month, as has The Fed’s outlook, apparently. Speculation of a rate hike coming strengthened the dollar, which has dropped from multi year highs in recent weeks. This is not especially good for manufacturing as a strong dollar makes U.S. goods more expensive. Oil prices retreated a little this week after rising 40% from a 13 year low on February 11 when U.S crude oil hit $26 a barrel. Oil was over $40 a barrel early in the week before dropping back to end the week at $39.46. Low oil prices have hurt energy companies, and energy producing areas where companies have cutback on production and laid off workers. After six weeks of gains stocks retreated a little this week. The Dow Jones Industrial Average closed the week at 17,515.33, down from 17,602.30 last week. The S&P 500 closed the week at 2,035.94, down from 2,049.58 last week. The NASDAQ closed Friday at 4,773.50, down from 4,795.65 last week.

Bond yields almost unchanged for the week – The 10 year U.S. Treasury bond closed Friday yielding 1.91%, slightly higher than 1.88% last week. The 30 year U.S. Treasury bond closed Friday yielding 2.67%, almost unchanged from 2.68% last week. Mortgage rates follow bond yields so we watch bonds carefully.

Mortgage rates -The Freddie Mac Primary Mortgage Survey released on March 24, 2016 showed that average mortgage rates from lenders surveyed for the most popular products were as follows: The 30 year fixed average rate was 3.71%. The 15 year fixed average rate was 2.96% The 5/1 ARM average was was 2.89%.

California existing home sales show mixed results in February – The California Association of Realtors reported that the number of California home sales in February was up 2.6% from January, and 6.4% above last February’s levels. The Los Angeles region showed almost identical increases as the state as a whole. Tempering the report was home prices. The statewide median price fell 4.7% in February from January and year over year the median price was up just 3.8% from last February. Inventory levels which hit record lows of a 3 month supply just a few months ago have increased. The unsold inventory index rose to a 4.6 month supply in February as more homes have hit the market. The unsold inventory index was at a 4.9 month supply last February before edging down as sales increased in the spring.

U.S. Existing home sales fall sharply in February – The National Association of Realtors reported that month over month total existing home sales dropped 7.1% in February. On a positive, home sales were 2.2% higher than last February’s levels. The drop was most significant in the Northeast and Midwest which weighed down the national numbers. Weather was thought to have played a part as a massive snow storm in the east may have slowed sales. Low inventory levels, were also to blame according to the report.

New home sales jump in February – The Commerce Department reported that the number of sales of new homes surged 38.5% in the Western United States. All other regions declined and the country as a whole showed new home sales up 2% in February. Obviously, strong sales here in the west pulled that number positive.

Have a great weekend,

Syd