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Economic Update | Week Ending September 14, 2024

Economic data this week – The August reading of the Consumer Price Index (CPI) showed that consumer inflation continues to moderate. Consumer prices rose 2.5% from one year ago, down 0.4% from July’s annual level of 2.9%, and the lowest annual rate since February 2021. The CPI rate peaked at 9.1% in June of 2022 and has worked its way down gradually. The Produce Price Index (PPI) was also released this week. It showed that wholesale rose just 1.7% from last August. Unfortunately, core PPI, which excludes food and energy moved up 3.3% from one year ago. The difference between the PPI and the Core PPI was mainly attributed to lower energy costs as oil prices have dropped significantly from one year ago. Next week the Fed will drop their key interest rates for the first time in four years. It is widely believed that it will be a .25% drop, as a .5% drop so close to the election could have political implications.

The graph below shows the movement of the Consumer Price Index from 2021 to the present.

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Stock markets – Stock market indexes made up last week’s losses to end the week up sharply. The Dow Jones Industrial Average closed the week at 41,393.78, up 2.6% from 40,345.42 last week. It is up 9.8% year-to-date. The S&P 500 closed the week at 5,626.78, up 4% from 5,408.42 last week. The S&P is up 18% year-to-date. The Nasdaq closed the week at 17,683.98, up 5.9% from 16,690.83 last week. It is up 17.8% year-to-date.

U.S. Treasury bond yields dropped sharply this week – The 10-year treasury bond closed the week yielding 3.66%, down from 3.72% last week. The 30-year treasury bond yield ended the week at 3.98%, down from 4.03% 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 September 12, 2024, were as follows: The 30-year fixed mortgage rate was 6.2%, down from 6.35% last week. The 15-year fixed was 5.27%, down from 5.47% last week.

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

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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!
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Mortgage Rate Update | September 12, 2024

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 September 12, 2024, were as follows:

The 30-year fixed mortgage rate was 6.2%, down from 6.35% last week. The 15-year fixed was 5.27%, down from 5.47% 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.

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Economic Update | Week Ending September 7, 2024

U.S. hiring stabilized in August after dropping in July – The Department of Labor and Statistics reported that 143,000 new jobs were added in August. That was an increase from a revised 89,000 jobs added in July, yet below economists’ expectations of 165,000 new jobs. The unemployment rate ticked down 4.2% in August from 4.3% in July which marked its highest level since October 2021. Average hourly wages increased 3.8% year-over-year in August, up from a 3.6% annual increase in July. Stock markets dropped on fears that as the economy is heading toward a slowdown, which it needs to do to control inflation, spending will drop, and profits will decrease. Economists widely speculated that with job growth higher than in July, wages increasing at a higher rate, and the unemployment rate stabilizing, there was enough strength in the report for the Fed to do a .25% rate drop rather than a .50% rate drop at their meeting next week.

Stock markets – Stock markets dropped sharply this week. While all indexes were down, the tech-heavy Nasdaq had its worst week since 2022, dropping over 6%. Although tech stocks fared the worst, the sell-off was broad-based with nearly all sectors falling as investors feel that the slowing job market will lead to some sort of slowdown in the economy. The Dow Jones Industrial Average closed the week at 40,345.42, down 2.9% from 41,563.08 last week. It is up 10.3% year-to-date. The S&P 500 closed the week at 5,408.42, down 4.2% from 5,648.40 last week. The S&P is up 18.4% year-to-date. The Nasdaq closed the week at 16,690.83 down 6.4% from 17,713.63 last week. It is up 18% year-to-date.

U.S. Treasury bond yields dropped sharply this week – The 10-year treasury bond closed the week yielding 3.72%, down from 3.91% last week. The 30-year treasury bond yield ended the week at 4.03%, down from 4.20% 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 September 5, 2024, were as follows: The 30-year fixed mortgage rate was 6.35%, unchanged from 6.35% last week. The 15-year fixed was 5.47%, down from 5.51% 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.

Have a great weekend!
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Mortgage Rate Update | September 5, 2024

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 September 5, 2024, were as follows:

The 30-year fixed mortgage rate was 6.35%, unchanged from 6.35% last week. The 15-year fixed was 5.47%, down from 5.51% 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.

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Economic Update | Week Ending August 31, 2024

August marked an official change in policy for the Federal Reserve as Fed Chairman Jerome Powell stated, “The time to cut rates has come,” following the Fed’s annual conference in Jackson Hole. The first-rate cut is expected in September. this month every inflation indicator showed that inflation was taming. July’s inflation reports came in as follows: The Consumer Price Index showed consumer prices rose 2.9% from one year ago. The Producer Price Index showed that wholesale prices rose 2.2% from one year ago. The Personal Consumption Expenditures Price Index, a favorite of the Fed showed a 2.5% year-over-year increase. The second quarter Gross Domestic Product, the broadest measure of the strength of the economy was revised upward from an initial estimate of 2.8% to a 3% increase. The August jobs report will be released next Friday. The Fed is watching employment closely in determining how much and how far to cut rates. They have indicated that the first cut will be in September.

Stock Markets – The Dow Jones Industrial Average closed the month at 41,563.08, up 1.8% from 40,842.79, on July 31, 2024. It is up 10.3% year-to-date. The S&P 500 closed the month at 5,648.40, up 2.3% from 5,522.30 last month. It is up 18.4% year-to-date. The NASDAQ closed the month at 17,713.63, up 0.1% from 17,599.40 last month. It is up 18% year-to-date.

U.S. Treasury bond yields – The 10-year treasury bond closed the month yielding 3.91%, down from 4.09% last month. The 30-year treasury bond yield ended the month at 4.20%, down from 4.35% last month. We watch bond yields because mortgage rates often follow treasury 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 29th, 2024, were as follows: The 30-year fixed mortgage rate was 6.35%, down from 6.46% last week. The 15-year fixed was 5.51%, down from 5.62% 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.

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

U.S. existing-home sales July 2024 – The National Association of Realtors reported that existing-home sales totaled 3.95 million units on a seasonally adjusted annualized rate in July, down 2.5% from an annualized rate of 4.05 million last July. The median price for a home in the U.S. in June was $422,600, up 4.2% from $410,109 one year ago. There was a 4-month supply of homes for sale in June, up from a 3.3-month supply one year ago. First-time buyers accounted for 29% of all sales. Investors and second-home purchases accounted for 13% of all sales. All cash purchases accounted for 27% of all sales. Foreclosures and short sales accounted for 1% of all sales.

July California existing-home sales report – Prices down slightly from June, but up 6.5% from one year ago – The California Association of Realtors reported that existing-home sales totaled 278,810 on an annualized rate in July, up 4.7% from a revised 268,840 homes sold on an annualized basis last July. There was a 2.9-month supply of homes for sale, up from a 2.5-month supply one year ago. The statewide median price paid for a home in July was $886,560, down 1.6% from $900,720 in June and, up 6.5% from $832,530 one year ago.

Have a great weekend!
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Economic Update | Month Ending August 31, 2024

August marked an official change in policy for the Federal Reserve as Fed Chairman Jerome Powell stated, “The time to cut rates has come,” following the Fed’s annual conference in Jackson Hole. The first-rate cut is expected in September. This month every inflation indicator showed that inflation was taming. July’s inflation reports came in as follows: The Consumer Price Index showed consumer prices rose 2.9% from one year ago. The Producer Price Index showed that wholesale prices rose 2.2% from one year ago. The Personal Consumption Expenditures Price Index, a favorite of the Fed showed a 2.5% year-over-year increase. The second quarter Gross Domestic Product, the broadest measure of the strength of the economy was revised upward from an initial estimate of 2.8% to a 3% increase. The August jobs report will be released next Friday. The Fed is watching employment closely in determining how much and how far to cut rates. They have indicated that the first cut will be in September.

The graph below shows the CPI rate from 2021 to now.

Stock Markets – The Dow Jones Industrial Average closed the month at 41,563.08, up 1.8% from 40,842.79, on July 31, 2024. It is up 10.3% year-to-date. The S&P 500 closed the month at 5,648.40, up 2.3% from 5,522.30 last month. It is up 18.4% year-to-date. The NASDAQ closed the month at 17,713.63, up 0.1% from 17,599.40 last month. It is up 18% year-to-date.

U.S. Treasury bond yields – The 10-year treasury bond closed the month yielding 3.91%, down from 4.09% last month. The 30-year treasury bond yield ended the month at 4.20%, down from 4.35% last month. We watch bond yields because mortgage rates often follow treasury bond yields.

Mortgage rates reached their lowest levels in over a year – 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 19, 2024, were as follows: The 30-year fixed mortgage rate was 6.35%, down from 6.78% at the end of May. The 15-year fixed was 5.51%, down from 6.07% last month.

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.

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

U.S. existing-home sales July 2024 – The National Association of Realtors reported that existing-home sales totaled 3.95 million units on a seasonally adjusted annualized rate in July, down 2.5% from an annualized rate of 4.05 million last July. The median price for a home in the U.S. in June was $422,600, up 4.2% from $410,109 one year ago. There was a 4-month supply of homes for sale in June, up from a 3.3-month supply one year ago. First-time buyers accounted for 29% of all sales. Investors and second-home purchases accounted for 13% of all sales. All cash purchases accounted for 27% of all sales. Foreclosures and short sales accounted for 1% of all sales.

July California existing-home sales report – Prices down slightly from June, but up 6.5% from one year ago – The California Association of Realtors reported that existing-home sales totaled 278,810 on an annualized rate in July, up 4.7% from a revised 268,840 homes sold on an annualized basis last July. There was a 2.9-month supply of homes for sale, up from a 2.5-month supply one year ago. The statewide median price paid for a home in July was $886,560, down 1.6% from $900,720 in June and, up 6.5% from $832,530 one year ago.
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Mortgage Rate Update | August 29, 2024

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 29th, 2024, were as follows:

The 30-year fixed mortgage rate was 6.35%, down from 6.46% last week. The 15-year fixed was 5.51%, down from 5.62% 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.

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Economic Update | Week Ending August 24, 2024

Economic news this week – The big news this week was Federal Reserve Chairman, Jerome Powell’s comments at the Fed’s annual Jackson Hole Conference. In his speech he said, “The time has come to cut interest rates.” He further stated that inflation had moderated and was heading toward the Fed’s 2% annual target. Stocks rallied on the news. Many experts feel that there will be a .25% drop in September, perhaps a .50% in November, and a 25% drop in December. That’s a 1% drop by year’s end. Others feel that there will be three 25% drops, totaling a .75% drop by year’s end. Either way, it’s great news for loans tied to short-term rates. HLOC line of credit loans are often tied to prime. Prime rates normally follow Fed rate movements. While HLOC loans will come down the same amount that Fed rates do, long-term mortgage rates will not. Mortgage rates typically follow long-term bond rates. We expect mortgage rates to drop, but not anywhere near the amount that Fed rates drop. In other news, the number of new jobs created over the past year was revised downward by 818,000 jobs, therefore U.S. job growth has been far weaker than initially reported. This was another consideration in the Fed’s decision to announce a shift to rate cuts.

Stock markets – The Dow Jones Industrial Average closed the week at 41,175.08 up 1.3% from 40,656.79 last week. It is up 9.2% year-to-date. The S&P 500 closed the week at 5,634.61, up 3.9% from 5,554.25 last week. The S&P is up 18.1% year-to-date. The Nasdaq closed the week at 17,877.79 up 1.4% from 17,631.72 last week. It is up 19.1% year-to-date.

U.S. Treasury bond yields dropped sharply this week – The 10-year treasury bond closed the week yielding 3.81%, down from 3.89% last week. The 30-year treasury bond yield ended the week at 4.10%, down from 4.15% 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 22nd, 2024, were as follows: The 30-year fixed mortgage rate was 6.46%, down from 6.49%, last week. The 15-year fixed was 5.62%, down from 5.66% 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 California existing-home sales report – Prices down slightly from June, but up 6.5% from one year ago – The California Association of Realtors reported that existing-home sales totaled 278,810 on an annualized rate in July, up 4.7% from a revised 268,840 homes sold on an annualized basis last July. There was a 2.9-month supply of homes for sale, up from a 2.5-month supply one year ago. The statewide median price paid for a home in July was $886,560, down 1.6% from $900,720 in June and, up 6.5% from $832,530 one year ago.

Have a great weekend!
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