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Stocks surged, inflation moderated, and mortgage rates remained high in 2024

The Fed dropped their key interest rates by 1% in 2024 – The Fed began raising their key interest rates in 2022. They had increased rates to a 24-year high to combat inflation before a ½% drop in September, a ¼% drop in November, and a ¼% drop in December. Federal Reserve Chairman Powell said at the end of the year that he only expects two additional rate drops in 2025 and that rates would remain above “neutral levels” for the foreseeable future because inflation has picked up since hitting a 3-year low in September. He also said that the economy and job market were stronger than expected and that the Fed does not expect inflation to drop to its 2% annual rate target until 2026. The Consumer Price Index (CPI) showed that consumer prices increased 2.7% year-over-year in November, up from a 2.6% year-over-year increase in October. The CPI peaked at 9.1% in June 2022 and has worked its way down to a 2.4% year-over-year increase in September but has ticked up the last two months. We are well below the CPI rate of 3.4% in December 2023, so we have moved in the right direction. Core CPI,which excludes volatile food and energy costs rose 3.3% year-over-year in November for the fourth consecutive month. That is down from 3.9% in December 2023. The Personal Consumption Expenditures Index (PCE), the Fed’s preferred measure of inflation, showed that consumer prices rose 2.4% in November from one year ago. Excluding food and energy Core PCE increased 2.8% year-over-year.

The graph below shows the CPI rate since 2021:

Stocks surged and Stock markets hit record highs in 2024 – All three indexes hit record highs in 2024 but closed the year off their record highs after the Fed announced that they were concerned that inflation had heated up and they were going to stall rate drops in 2025. The DowJones Industrial Average ended the year at 42,544.72, up 12.9% from 37,689.40 on December 31, 2023. The S&P 500 closed the year at 5,881.63, up 23.3% from 4,769.89 on December 31, 2023. The NASDAQ closed at 19,310.79, up 28.6% from 15,011.35 at the end of 2023.

U.S. Treasury Bond Yields increased in 2024 – Bond yields increased in the first six months of the year. As the inflation ratesdropped to their lowest levels since 2021 in September bond yields also dropped to their lowest levels of the year but increased in November and December to end the year higher than where they began the year. While the inflation rate is lower than it was a year ago the amount of the national debt has made treasury bonds less attractive and has pushed up rates. The 10-year U.S. treasury bond yield closed the year at 4.58%, up from 3.88% On December 31, 2023. The 30-year treasury yield ended the year at 4.78%, up from 4.03% on Dec. 31, 2023. We watch bond yields because mortgage rates often follow treasury bond yields.

Mortgage rates – Mortgage rates began the year with the 30-year at 6.61%, by September it dropped to 6% but increased to end the year to 6.85%. Many people have asked, “Why have mortgage rates increased if the Fed has lowered rates by 1%?” That is an interesting question. The Fed controls overnight rates that banks pay to borrow money overnight from the Federal Reserve. That is the shortest-term rate. When overnight rates drop, banks drop their “prime” lending rate which is offered to their best customers. The prime rate is a common index for lines of credit. Those did drop 1%. Mortgages are long-term rates. Investors try to forecast inflation over a long period when purchasing mortgages. They need a spread over the inflation rate that they forecast. With the economy picking up steam, more jobs available than workers looking for work, and consumer spending higher long-term risk of inflation is higher. 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 December 26th, 2024, were as follows: The 30-year fixed mortgage rate was 6.85%, up from 6.61% on December 28, 2023. The 15-year fixed was 6%, up from 5.93% on December 28, 2023.

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

Home sales data is released on the third week of the month for the previous month by the California Association of Realtors and the National Association of Realtors. These are November’s home sales figures.

U.S. existing-home sales November 2024 – National home prices rose about 5% in 2024 – The National Association of Realtors reported that existing-home sales totaled 4.15 million units on a seasonally annualized rate in November, up 4.8% from 3.96 million units on a seasonally adjusted annualized rate in October, and up 6.1% from an annualized rate of 3.91-million units last November. The median price for a home sold in the U.S. in November was $406,100, up 4.7% from $387,800 one year ago. There was a 3.8-month supply of homes for sale in November, down from a 4.2-month supply in October, and up from a 3.5-month supply one year ago. First-time buyers accountedfor 30% of all sales. Investors and second-home purchases accounted for 13% of all sales. All cash purchases accounted for 25% of all sales. Foreclosures and short sales accounted for 2% of all sales.

California existing-home sales – Housing prices rose about 4% in 2024 – The California Association of Realtors reported that existing-home sales totaled 267,800on an annualized basis in November, up 1.1% from 264,870 on an annualized basis in October, and up 19.5% from a revised 224,140 homes sold on an annualized basis last November. The statewide median price paid for a home was $852,880 in November, down 4% from $888,740 in October, and up 3.8% from $821,710 one year ago. There was a 3.3-month supply of homes for sale in November, up from a 2.9-month supply in November 2023.

The graph below lists home sales data by county in Southern California:

Economic news this week – Stock markets inched higher in a holiday-shortened week, making up some of last week’s losses. Mortgage interest rates and treasury bond yields increased further this week. They are now at their highest levels since July. It looks like they will end the year higher than at the start of the year. Experts still expect them to drop next year, but not as quickly as they thought they would drop just a few weeks ago, as inflation and the economy have shown signs of heating up. Stock markets – The Dow Jones Industrial Average closed the week at 42,992.21, up 0.4% from 42,840.26 last week. It is up 14.1% year-to-date. The S&P 500 closed the week at 5,970.84, up 0.7% from 5,930.55 last week. The S&P is up 25.2% year-to-date. The Nasdaq closed the week at 19,722.02, up 1% from19,572.60 last week. It is up 31.4% year-to-date. U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 4.62%, up from 4.52% last week. The 30-year treasury bond yield ended the week at 4.82%, up from 4.72% 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 December 26th, 2024, were as follows: The 30-year fixed mortgage rate was 6.85%, up from 6.72% last week. The 15-year fixed was 6%, up from 5.92% last week. The graph below shows the trajectory of mortgage rates over the past year. Happy New Year!

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 December 26th, 2024, were as follows:

The 30-year fixed mortgage rate was 6.85%, up from 6.72% last week. The 15-year fixed was 6%, up from 5.92% 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.

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 December 19th, 2024, were as follows:

The 30-year fixed mortgage rate was 6.72%, up from 6.6% last week. The 15-year fixed was 5.92%, up from 5.84% 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.

Reports released this week showed that inflation had ticked up in November – The Consumer Price Index (CPI) showed that consumer prices increased 2.7% year-over-year in November, up from a 2.6% year-over-year increase in October. The CPI peaked at 9.1% in June 2022 and worked its way down to a 2.4% year-over-year increase in September. Core CPI, which excludes volatile food and energy costs rose 3.3% year-over-year in November for the fourth consecutive month. The Produce Price Index (PPI) showed that wholesale prices increased 3% year-over-year in November, up from a 2.4% year-over-year increase in October. Core PPI increased 3.4% year-over-year in November, up from 3.1% in October. The Federal Reserve’s mandate is to control inflation and maximize employment. Their target inflation rate is a 2% year-over-year increase. While inflation has moved down considerably, it has begun to move up in the last two months. While many experts believe that the Fed may still drop interest rates at their meeting next week, future drops will be less often and not as low and as fast as expected in September when inflation rates were lower. Other data showed that jobless claims increased last week. The Fed does want to get the unemployment rate up, as we are still in an environment where there is a shortage of workers pushing wages up. They want wages to rise, but not at the rate they are currently rising, as consumer spending fuels inflation. Mortgage rates and bond yields rose this week.

The graph below shows the CPI rate since 2021

Stock markets – The Dow Jones Industrial Average closed the week at 43,828.06 down 1.8% from 44,642.52 last week. It is up 16.3% year-to-date. The S&P 500 closed the week at 6,051.09, down 0.6% from 6,090.27 last week. The S&P is up 26.9% year-to-date. The Nasdaq closed the week at 19,926.72, up 3.7% from 19,218.17 last week. It is up 32.7% year-to-date.

U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 4.49%, up from 4.15% last week. The 30-year treasury bond yield ended the week at 4.61%, up from 4.34% 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 December 12th, 2024, were as follows:

The 30-year fixed mortgage rate was 6.6%, down from 6.69% last week. The 15-year fixed was 5.84%, down from 5.96% last week.

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

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 December 12th, 2024, were as follows:

The 30-year fixed mortgage rate was 6.6%, down from 6.69% last week. The 15-year fixed was 5.84%, down from 5.96% 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.

Economic news this week This week the Labor Department’s November jobs report was released. Even though the number of new jobs was higher than expected and job gains for September and October were revised higher, bond yields and mortgage rates remained at their lowest levels in six weeks. The unemployment rate ticked up a little and wage increases were higher than the Fed target. Several Fed governors and Fed Chairman Powell also spoke this week. They all spoke of the strength of the economy and cautioned that while rates may drop it will not be as quickly as expected in September, as the economy has picked up steam and inflation has risen recently. Next week the November Consumer Price Index and the Producer Price Index will be released. That will show the trend of inflation. November home sales figures will be released the week after next from the California Association of Realtors and the National Association of Realtors. Local November home sales data will be available Sunday for your city or zip code at RodeoRe.com. It’s compiled from the same data source that the California Association of Realtors uses.

U.S. job growth rebounded in November – The Department of Labor and Statisticsreported that 227,000 new jobs were added in November, up from the revised 36,000 new jobs added in October when two hurricanes and strikes stalled hiring. Economists surveyed expected 214,000 new jobs in November. The unemployment rate ticked up to 4.2% in November from 4.1%, in September and October. Average hourly wages increased 4% year-over-year in November, matching October’s increase.

Stock markets -The Dow Jones Industrial Average closed the week at 44,642.52, down 0.6% from 44,910.65 last week. It is up 18.4% year-to-date. The S&P 500 closed the week at 6,090.27, up 1% from 6,032.38 last week. The S&P is up 27.7% year-to-date. The Nasdaq closed the week at 19,859.77, up 3.3% from 19,218.17 last week. It is up 32.3% year-to-date.

U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 4.15%, down slightly from 4.18% last week. The 30-year treasury bond yield ended the week at 4.34%, down slightly from 4.36% 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 November 21st, 2024, were as follows: The 30-year fixed mortgage rate was 6.69%, down from 6.81% last week. The 15-year fixed was 5.96%, down from 6.10% last week.

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

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 December 5th, 2024, were as follows:

The 30-year fixed mortgage rate was 6.69%, down from 6.81% last week. The 15-year fixed was 5.96%, down from 6.10% 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.

November marked the best month of the year for stock markets. Ending the month at all-time highs, stock markets began to surge when President Trump won the election, as Investors expect easing regulations and lower corporate tax rates. At the same time bond yields and mortgage rates increased as fears of tariffs and deportations could fuel inflation; however, bond yields and mortgage rates dropped in the last week of the month. Inflation gauges did rise slightly in October. The Consumer Price Index (CPI) showed that consumer process increased 2.6% year-over-year in October, up from a 2.4% year-over-year increase in September. Core CPI, which excludes food and energy prices, increased 3.3% year-over-year, unchanged from September’s annual increase. The Producer Price Index (PPI) also increased in October. It measures wholesale prices which increased 2.4% year-over-year in October, its highest level in 4 months, and up from a 1.9% year-over-year increase in September. The Core PPI level came in at a 3.5% year-over-year increase in October, up from a 3.3% increase in September. The Personal Consumption Expenditure Price Index (PCE) showed a 12-month inflation rate of 2.3%, up from a 2.1% annual rate in September. Core PCE increased 2.8% year-over-year. These increases were in line with analysts’ expectations as increased retail sales, consumer confidence, and other data pointed to the economy picking up.

 

The chart below shows the CPI rate since 2021. Even though it moved up last month, it’s still much lower than it has been over the past two years.

 

Stock Markets -The Dow Jones Industrial Average closed the month at 44,910.65, up 7.5% from 41,763.46, on October 30, 2024. It is up 19.2% year-to-date. The S&P 500 closed the month at 6,032.38, up 5.7% from 5,705.45 last month. It is up 26.5% year-to-date. The NASDAQ closed the month at 19,218.17, up 6.3% from 18,085.15 last month. It is up 28% year-to-date.

U.S. Treasury bond yields – The 10-year treasury bond closed the month yielding 4.18%, down from 4.28% last month. The 30-year treasury bond yield ended the month at 4.36%, down from 4.47% last month. We watch bond yields because mortgage rates often follow treasury bond yields.

Mortgage rates – Mortgage rates jumped in October on fears of inflation picking up in future months based on stronger economic reports. 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 November 27, 2024, were as follows: The 30-year fixed mortgage rate was 6.81%, up from 6.72% at the end of September. The 15-year fixed was 6.10%, up from 5.99% last month.

Home sales data is released on the third week of the month for the previous month by the California Association of Realtors and the National Association of Realtors. These are October’s home sales figures.

U.S. existing-home sales October 2024 – The National Association of Realtors reported that existing-home sales totaled 3.96 million units on a seasonally adjusted annualized rate in October, up 2.9% from an annualized rate of 3.85 million units last October. That marked the first year-over-year increase in sales in 3 years. The median price for a home sold in the U.S. in October was $407,200, up 4% from $391,600 one year ago. There was a 4.2-month supply of homes for sale in October, up from a 3.6-month supply one year ago. First-time buyers accounted for 27% of all sales. Investors and second-home purchases accounted for 17% of all sales. All cash purchases accounted for 27% of all sales. Foreclosures and short sales accounted for 2% of all sales.

October California existing-home sales report – The California Association of Realtors reported that existing-home sales totaled 264,870 on an annualized rate in October, up 4.7% from 253,010 homes on an annualized rate in September, and up 5.8% from a revised 241,910 homes sold on an annualized basis last October. The statewide median price paid for a home in October was $888,740, up 2.4% from $868,150 in September, and up 5.8% from $839.990 one year ago. There was a 3.1- month supply of homes for sale in October, down from a 3.6-month supply of homes for sale in September, but up from a 2.7-month supply in October 2023.

The graph below lists home sales data by county in Southern California.

November marked the best month of the year for stock markets. Ending the month at all-time highs, stock markets began to surge when President Trump won the election, as Investors expect easing regulations and lower corporate tax rates. At the same time bond yields and mortgage rates increased as fears of tariffs and deportations could fuel inflation; however, bond yields and mortgage rates dropped in the last week of the month. Inflation gauges did rise slightly in October. The Consumer Price Index (CPI) showed that consumer process increased 2.6% year-over-year in October, up from a 2.4% year-over-year increase in September. Core CPI, which excludes food and energy prices, increased 3.3% year-over-year, unchanged from September’s annual increase. The Producer Price Index (PPI) also increased in October. It measures wholesale prices which increased 2.4% year-over-year in October, its highest level in 4 months, and up from a 1.9% year-over-year increase in September. The Core PPI level came in at a 3.5% year-over-year increase in October, up from a 3.3% increase in September. The Personal Consumption Expenditure Price Index (PCE) showed a 12-month inflation rate of 2.3%, up from a 2.1% annual rate in September. Core PCE increased 2.8% year-over-year. These increases were in line with analysts’ expectations as increased retail sales, consumer confidence, and other data pointed to the economy picking up.

Stock markets -The Dow Jones Industrial Average closed the week at 44,910.65, up 1.4% from 44,296.51 last week. It is up 19.2% year-to-date. The S&P 500 closed the week at 6.032.38, up 1.1% from 5,969.34 last week. The S&P is up 26.5% year-to-date. The Nasdaq closed the week at 19,218.17, up 1.1% from 19,003.65 last week. It is up 28% year-to-date.

U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 4.18%, down from 4.41% last week. The 30-year treasury bond yield ended the week at 4.36%, down from 4.60% 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 November 21st, 2024, were as follows: The 30-year fixed mortgage rate was 6.84%, up from 6.78% last week. The 15-year fixed was 6.02%, up from 5.99% last week.

Economic update for the month ending November 30, 2024

The chart below shows the CPI rate since 2021. Even though it moved up last month, it’s still much lower than it has been over the past two years.

Stock Markets -The Dow Jones Industrial Average closed the month at 44,910.65, up 7.5% from 41,763.46, on October 30, 2024. It is up 19.2% year-to-date. The S&P 500 closed the month at 6,032.38, up 5.7% from 5,705.45 last month. It is up 26.5% year-to-date. The NASDAQ closed the month at 19,218.17, up 6.3% from 18,085.15 last month. It is up 28% year-to-date.

U.S. Treasury bond yields – The 10-year treasury bond closed the month yielding 4.18%, down from 4.28% last month. The 30-year treasury bond yield ended the month at 4.36%, down from 4.47% last month. We watch bond yields because mortgage rates often follow treasury bond yields.

Mortgage rates – Mortgage rates jumped in October on fears of inflation picking up in future months based on stronger economic reports. 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 November 27, 2024, were as follows: The 30-year fixed mortgage rate was 6.81%, up from 6.72% at the end of September. The 15-year fixed was 6.10%, up from 5.99% last month.

Home sales data is released on the third week of the month for the previous month by the California Association of Realtors and the National Association of Realtors. These are October’s home sales figures.

U.S. existing-home sales October 2024 – The National Association of Realtors reported that existing-home sales totaled 3.96 million units on a seasonally adjusted annualized rate in October, up 2.9% from an annualized rate of 3.85 million units last October. That marked the first year-over-year increase in sales in 3 years. The median price for a home sold in the U.S. in October was $407,200, up 4% from $391,600 one year ago. There was a 4.2-month supply of homes for sale in October, up from a 3.6-month supply one year ago. First-time buyers accounted for 27% of all sales. Investors and second-home purchases accounted for 17% of all sales. All cash purchases accounted for 27% of all sales. Foreclosures and short sales accounted for 2% of all sales.

October California existing-home sales report – The California Association of Realtors reported that existing-home sales totaled 264,870 on an annualized rate in October, up 4.7% from 253,010 homes on an annualized rate in September, and up 5.8% from a revised 241,910 homes sold on an annualized basis last October. The statewide median price paid for a home in October was $888,740, up 2.4% from $868,150 in September, and up 5.8% from $839.990 one year ago. There was a 3.1- month supply of homes for sale in October, down from a 3.6-month supply of homes for sale in September, but up from a 2.7-month supply in October 2023.

The graph below lists home sales data by county in Southern California.

Have a great weekend!