Economic news for the week – Following last Friday’s jobs report where the unemployment rate came in at 4.3% a panic hit global markets. This was not due to 4.3% being a high unemployment number, it was because of the speed in which the unemployment rate has risen from 3.6%, a 60-year low, to the current 4.3%. In the past, a .5% jump in the unemployment rate average in a 3-month period over the previous 3-month period was a signal of a recession starting. Global and US markets sold off on Monday due to fears that the U.S. may be heading to a recession. For example, the Dow was down 1,000 points on Monday after falling over 700 points last Friday. Fortunately, by Tuesday investors were beginning to feel that recession fears were overblown and that the Sham Rule, named after the person, who found that a .5% jump in unemployment over consecutive 3-month periods signals a recession, may not be something to rely upon when the initial 3-month period begins with near-historic low unemployment levels. On Tuesday markets began to settle. On Thursday markets jumped and made up most of Monday’s huge losses when first-time unemployment claims came in well below expectations, solidifying the feeling that unemployment fears were overblown. Next week is going to be a big week for economic news. We have two inflation gages coming out. PPI (Producer Price Index) which shows wholesale price inflation and CPI (Consumer Price Index) which shows consumer price inflation. The Fed will be lowering interest rates. Depending on the level of inflation, and the unemployment rate, it’s just a matter of how far and how fast they will come down from the current “restrictive” 25-year highs to less restrictive levels.

Stock markets dropped sharply this week on recession fears – The Dow Jones Industrial Average closed the week at 39,497.54, down 0.6% from 39,727.26 last week. It is up 5.4% year-to-date. The S&P 500 closed the week at 5,344.16, unchanged from 5,346.56 last week. The S&P is up 12.2% year-to-date. The Nasdaq closed the week at 16,745.30, unchanged from 16,776.16 last week. It is up 11.8% year-to-date.

U.S. Treasury bond yields dropped sharply this week – The 10-year treasury bond closed the week yielding 3.94%, up from 3.80% last week. The 30-year treasury bond yield ended the week at 4.23%, up from 4.11% last week. We watch bond yields because mortgage rates follow bond yields. Even though bond yields are up for the week, they are well below where they were two weeks ago. Last Friday, the 10-year dropped from 4.18% the week before to 3.8% within hours after the unemployment rate was released. On Monday, the 10-year hit 3.68%, its lowest level in a year. Unfortunately, as investors began to feel that the panic was overblown, they left the safety of bonds and went back to stocks. As stock markets recovered U.S. bond yields went back up.

Mortgage rates – Every Thursday Freddie Mac publishes interest rates based on a survey of mortgage lenders throughout the week. The Freddie Mac Primary Mortgage Survey reported that mortgage rates for the most popular loan products as of August 8th, 2024, were as follows: The 30-year fixed mortgage rate was 6.47%, down from 6.73% last week. The 15-year fixed was 5.63%, down from 5.99% last week.

The graph below shows the trajectory of mortgage rates over the past year.

Freddie Mac was chartered by Congress in 1970 to keep money flowing to mortgage lenders in support of homeownership and rental housing. Their mandate is to provide liquidity, stability, and affordability to the U.S.

July home sales figures will be released next week by the California Association of Realtors and the following week by the National Association of Realtors. You can get that data now for your county, city, or zip code at RodeoRE.com.

Have a great weekend!

Explore our website for the most up-to-date information on real estate data and local news!

RodeoRe.com

U.S. hiring stalled and unemployment jumped in July – The Department of Labor and Statistics reported that 114,000 new jobs were added in July, well below the 185,000 new jobs forecasted by economists. The unemployment rate rose to 4.3% in July, its highest level since October 2021, and up from 4.1% in June. The lack of hiring and rise in the unemployment rate shocked investors. Stock markets dropped sharply as the three-month average unemployment rate exceeded a .5% increase from the previous three-month average. Under the Sham Rule Threshold, a .5% increase in the 3-month average unemployment rate for two consecutive 3-month periods often indicates the start of a recession. Average hourly wages increased 3.6% year-over-year in July, down from a 3.9% annual increase in June, and a 4.1% increase in May. This was not a good report. It panicked investors that fear that the Fed has left interest rates at 24-year highs for too long and that even a drop in September may be too late to avoid a recession. On a positive note, bond yields and mortgage rates dropped sharply on Friday after the jobs report was released. Bond yields and mortgage rates are now at their lowest levels in one year.

Stock markets dropped sharply this week on recession fears – The Dow Jones Industrial Average closed the week at 39,727.26, down 2.1% from 40,589.34 last week. It is up 5.4% year-to-date. The S&P 500 closed the week at 5,346.56, down 2.1% from 5,459.10 last week. The S&P is up 12.2% year-to-date. The Nasdaq closed the week at 16,776.16, down 3.5% from 17,357.88 last week. It is up 11.8% year-to-date

U.S. Treasury bond yields dropped sharply this week – The 10-year treasury bond closed the week yielding 3.80%, down from 4.20% last week. The 30-year treasury bond yield ended the week at 4.11%, unchanged from 4.45% last week. We watch bond yields because mortgage rates follow bond yields.

Mortgage rates – Every Thursday Freddie Mac publishes interest rates based on a survey of mortgage lenders throughout the week. The Freddie Mac Primary Mortgage Survey reported that mortgage rates for the most popular loan products as of August 1st, 2024, were as follows: The 30-year fixed mortgage rate was 6.73%, down from 6.78% last week. The 15-year fixed was 5.99%, down from 6.07% last week. Rates dropped sharply on Thursday and Friday. We were seeing rates closer to 6% after the job’s report was released on Friday.

The graph below shows the trajectory of mortgage rates over the past year.

Freddie Mac was chartered by Congress in 1970 to keep money flowing to mortgage lenders in support of homeownership and rental housing. Their mandate is to provide liquidity, stability, and affordability to the U.S.

Have a great weekend!

Mortgage rates – Every Thursday Freddie Mac publishes interest rates based on a survey of mortgage lenders throughout the week. The Freddie Mac Primary Mortgage Survey reported that mortgage rates for the most popular loan products as of August 1st, 2024, were as follows: The 30-year fixed mortgage rate was 6.73%, down from 6.78% last week. The 15-year fixed was 5.99%, down from 6.07% last week.

The graph below shows the trajectory of mortgage rates over the past year.

Freddie Mac was chartered by Congress in 1970 to keep money flowing to mortgage lenders in support of homeownership and rental housing. Their mandate is to provide liquidity, stability, and affordability to the U.S.

Explore our website for the most up-to-date information on real estate data and local news!

RodeoRe.com

Economic news this week – The second quarter Gross Domestic Product (GDP) was released this week. It showed that the economy grew 2.8% in the second quarter, exceeding analysts’ expectations of a 2.1% increase. Technology stocks continued to drop for a third straight week. On the inflation front, the Personal Consumption Expenditures Price Index (PCE), a key indicator for the Fed, was released on Friday. It showed that consumer prices rose 2.5% in June from one year ago. That is the lowest annual increase in two years, another indication that inflation is cooling. Core PCE, which excludes volatile food and energy prices, grew 2.6% year-over-year. Economists surveyed gave just an 8% chance of a rate drop at the Fed meeting next week but gave a 92% chance of a rate drop at the September Fed meeting. All the experts agree that a rate drop cycle is not far off, as the Fed’s key rates currently at a 25-year high have successfully tamed inflation.

Stock markets – The Dow Jones Industrial Average closed the week at 40,589.34, up 0.8% from 40,257.53 last week. It is up 7.7% year-to-date. The S&P 500 closed the week at 5,459.10, down 0.8% from 5,505.00 last week. The S&P is up 14.5% year-to-date. The Nasdaq closed the week at 17,357.88, down 2.1% from 17,726.94 last week. It is up 15.6% year-to-date.

U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 4.20%, down from 4.25% last week. The 30-year treasury bond yield ended the week at 4.45%, unchanged from 4.45% last week. We watch bond yields because mortgage rates follow bond yields.

Mortgage rates – Every Thursday Freddie Mac publishes interest rates based on a survey of mortgage lenders throughout the week. The Freddie Mac Primary Mortgage Survey reported that mortgage rates for the most popular loan products as of July 25, 2024, were as follows: The 30-year fixed mortgage rate was 6.78%, unchanged from 6.77% last week. The 15-year fixed was 6.07%, almost unchanged from 6.05% last week.

The graph below shows the trajectory of mortgage rates over the past year.

Freddie Mac was chartered by Congress in 1970 to keep money flowing to mortgage lenders in support of homeownership and rental housing. Their mandate is to provide liquidity, stability, and affordability to the U.S.

U.S. existing-home sales June 2024 – The National Association of Realtors reported that existing-home sales totaled 3.89 million units on a seasonally adjusted annualized rate in June, down 5.4% from an annualized rate of 4.11 million last June. The median price for a home in the U.S. in June was $426,900, up 4.1% from $410,109 one year ago. There was a 4.1-month supply of homes for sale in June, up from a 3.1-month supply one year ago. First-time buyers accounted for 29% of all sales. Investors and second-home purchases accounted for 16% of all sales. All cash purchases accounted for 28% of all sales. Foreclosures and short sales accounted for 2% of all sales.

Have a great weekend!

Mortgage rates – Every Thursday Freddie Mac publishes interest rates based on a survey of mortgage lenders throughout the week. The Freddie Mac Primary Mortgage Survey reported that mortgage rates for the most popular loan products as of July 25, 2024, were as follows: The 30-year fixed mortgage rate was 6.78%, up from 6.77% last week. The 15-year fixed was 6.07%, up from 6.05% last week.

The graph below shows the trajectory of mortgage rates over the past year.

Freddie Mac was chartered by Congress in 1970 to keep money flowing to mortgage lenders in support of homeownership and rental housing. Their mandate is to provide liquidity, stability, and affordability to the U.S.