| Interest rates rose to their highest levels since last November in April because inflation readings have risen since the beginning of the year. April key economic news included: Employers added 303,000 new jobs in March, well above the 200,000 economists expected. The Consumer Price Index (CPI) in March showed that consumer prices rose 3.5% year-over-year, up from 3.2% in February and 3.1% in January. Core Personal Consumption Expenditures index (PCE) grew by 3.7% in the first quarter of 2024 compared to the first quarter of 2023, yet Core PCE was just 2.7% higher in March compared to last March. Retail sales also came in much higher than expected. In negative economic news, the initial estimate for the first quarter of U.S. GDP showed that the economy grew at just a 1.6% pace, its slowest growth in two years and significantly off economists’ expectations of a 2.5% increase. With inflation heating back up and new jobs created at almost double the number expected, hopes of a Fed rate reduction soon have all but ended.
Stock Markets – The Dow Jones Industrial Average closed the month at 37,815.92 down 5% from 39,807.37 on March 31, 2023. It is up 0.3% year-to-date. The S&P 500 closed the month at 5,035.69, down 4.2% from 5,254.35 last month. It is up 5.6% year-to-date. The NASDAQ closed the month at 15,657.82, down 4.4% from 16,379.46 last month. It is up 4.4% year-to-date.
U.S. Treasury bond yields – The 10-year treasury bond closed the month yielding 4.69%, up from 4.20% last month. The 30-year treasury bond yield ended the month at 4.79%, up 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 April 25, 2024, were as follows: The 30-year fixed mortgage rate was 7.17%, up from 6.79% at the end of March. The 15-year fixed was 6.44%, up from 6.11% 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 March’s home sales figures.
U.S. existing-home sales – The National Association of Realtors reported that existing-home sales totaled 4.19 million units on a seasonally adjusted annualized rate in March, down 3.7% from an annualized rate of 4.35 million in March 2023. The median price for a home in the U.S. in March was, up 5.7% from last March. There was a 3.2-month supply of homes for sale in March, up from a 2.7-month supply one year ago. First-time buyers accounted for 32% of all sales. Investors and second-home purchases accounted for 15% of all sales. All cash purchases accounted for 28% of all sales. Foreclosures and short sales accounted for 2% of all sales.
Year-over-year California home prices jumped almost 8% in March. – The California Association of Realtors reported that existing home sales totaled 267,470 in March, down 7.8% from 290,470 closed sales in February, and down 4.4% from a revised 279,700 homes sold on an annualized basis last March. There was a 2.6-month supply of homes on the market in March, down from a 3-month month supply of homes in February and down from a 2.1-month supply one year ago. The statewide median price paid for a home in March was $854,490 up 7.9% from a revised median price of $793,260 last March.
The graph below shows home sales figures by county in Southern California.
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