Rodeo Realty

Second quarter GDP disappointing – The Commerce Department reported that U.S. economy expanded less than forecasted in the second quarter after a weaker start to the year than previously estimated as companies slimmed down inventories and remained wary of investing amid shaky global demand. Gross domestic product rose at a 1.2 percent annualized rate after a 0.8 percent advance in the first quarter. The median forecast of economists surveyed called for a 2.5 percent second-quarter increase. The report raises the risk to the outlook at a time Federal Reserve policy makers are looking for sustained improvement. While consumers were resilient last quarter, businesses were cautious, cutting back on investment and aggressively reducing stockpiles amid weak global markets, heightened uncertainty, and the lingering drag from a stronger dollar.

Stocks stable this week after 4 weeks of gains – Stocks ended the month higher even though the DOW was down for the week. The Dow was dragged down partly because Exxon Mobil Corp posted its biggest loss since 1999 and Chevron corp also posted a loss for the second quarter. They are both Dow stocks. Oil also fell back to $41 a barrel after hitting $50 a barrel at the end of June. The Dow Jones Industrial Average closed the week at 18,432.24, down from 18,570.85 last Friday, but up for the month from 17,929.99 on June 30. The S&P 500 closed the week at 2,173.60, unchanged from 2,175.03 last week. It was up from 2,098.86 on June 30. The NASDAQ closed the week at 5,162.13, up from last week’s close of 5,100.06, and up from 4,842.67 on June 30, 2016.

Bond yields down for the week and end the month pretty much unchanged – After rising last week yields held steady this week. The 10 year U.S. Treasury bond yield closed the week at 1.46%, down from 1.57% last Friday. It was 1.49% on June 30. The 30-year U.S. Treasury bond closed at 2.18%, down from 2.29% last week. The 30 year yield was 2.30% on June 30. Mortgage rates follow bond yields so we watch bond yields closely.

Mortgage rates – Mortgage rates still near historic lows. The Freddie Mac Primary Mortgage Survey released on July 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 3.48%. The 15-year fixed average rate was 2.78%. The 5/1 ARM average rate was 2.78%.

U.S. existing home sales at highest pace since February 2007 – The National Association of Realtors reported that existing home sales which include single family homes, condominiums, town-homes, and co-ops climbed 1.1% in June from May to a seasonally adjusted annual rate of 5.57 million. That was 3% higher than the 5.41 million in June 2015. It marks the highest number of sales since February 2007. Boosted by a greater share of sales to first-time buyers not seen in nearly four years, existing-home sales maintained their upward trajectory in June and increased for the fourth consecutive month, according to the National Association of Realtors. Only the Northeast saw a decline in closings in June. Sales to investors fell to their lowest overall share since July 2009. June pending home sales, homes under contract, also rose slightly. 

California pending home sales post third straight year over year increase in June – The California Association of Realtors reported that pending existing home sales continued their upward momentum in June to post three straight months of annual increases. Statewide pending home sales rose in June on an annual basis, with the Pending Home Sales Index (PHSI)* increasing 3.2 percent in June 2016 from June 2015, based on signed contracts. With pending sales on a rising trend in the past couple of months, June’s increase should lead to higher closed transactions in July and August. Pending home sales in Southern California as a whole rose 3.2 percent from June 2015 and 1.3 percent from May 2016, thanks to year-over-year gains of 5.5 percent in Los Angeles County, 4.1 percent in San Bernardino County, and 1.3 percent in San Diego County. Orange County experienced a 6.0 percent decrease from the previous year. 

New home sales hit highest pace in 8 years – Commerce Department data showed that new home sales increased 3.5% in June to an annualized rate of 592,000 homes. Experts had forecast an annualized rate of 560,000 homes. Purchases of new U.S. single-family homes rose in June to the highest level in more than eight years, indicating a firm and resilient housing market. 

California adds 40,299 jobs in June, but the sate’s unemployment rate was higher – The Bureau of Labor Statistics reported that although the state added over 40,000 jobs in June, the unemployment rate rose 0.2% in June to 5.4%. California’s unemployment rate peaked at 12.2% in February 2010 and is now 6.8% lower that at the height of the recession. June’s unemployment rate of 5.4% was up from May’s post recession low of 5.2%. 

Have a great weekend!
Syd

Stocks up for fourth straight week – Sparked by second quarter quarterly profits coming in above expectations, continued low interest rates, and better than expected economic reports stocks continued to advance. The Dow Jones Industrial Average closed the week at 18,570.85, up from 18,516.56 last Friday. The S&P 500 closed the week at 2,175.03, up from 2,161.75 last week. The NASDAQ closed the week at 5,100.06, up from last week’s close of 5,029.50. 

Bond yields unchanged for the week – After rising last week yields held steady this week. The 10 year U.S. Treasury bond yield closed the week at 1.57%, almost unchanged from 1.60% last Friday. The 30-year U.S. Treasury bond closed at 2.29%, unchanged from 2.30% last week. Mortgage rates follow bond yields so we watch bond yields closely.

Mortgage rates – Mortgage rates were slightly higher this week, yet still near historic lows. The Freddie Mac Primary Mortgage Survey released on July 21, 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 3.45%. The 15-year fixed average rate was 2.75%. The 5/1 ARM average rate was 2.78%.

California’s existing home sales up 10% in June – The California Association of Realtors reported that the number of existing homes sold in California were up 10% in June over May’s seasonally adjusted annualized number. It marked the first month over month double digit gain since January 2011. The statewide median price home in June was $519,440 up 5.5% from last June, as tight inventory levels and low interest rates continue to push up home prices. The unsold inventory index showed that inventory levels of existing homes dropped from a 3.4 month supply in May to a 3.2 month supply in June. The long run average has been a 6.1 month supply, indicating that inventory levels are running about 60% of normal, according to CAR. 

Have a great weekend!
Syd

Stocks rise again this week – Stocks were up for a third week in a row reaching a series of record highs. The sharp rebound has been fueled by better than expected economic data, higher expectations for second quarter corporate earnings, and low interest rates. The Dow Jones Industrial Average closed the week at 18,516.55, up from 18,146.75 last Friday. The S&P 500 closed the week at 2,161.75, up from 2,129.90 last week. The NASDAQ closed the week at 5,029.50, up from last week’s close of 4,956.76.

Bond yields rise this week – After dropping steadily for 3 straight weeks bond yields rose this week. The 10 year U.S. Treasury bond yield closed the week at 1.60%, up from 1.37% last Friday. The 30-year U.S. Treasury bond closed at 2.30%, up from 2.11% last week. Mortgage rates follow bond yields so expect mortgage rates to rise slight next week. 

Mortgage rates – Mortgage rates were slightly higher this week, yet still near historic lows. The Freddie Mac Primary Mortgage Survey released on July 14, 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 3.42%. The 15-year fixed average rate was 2.72%. The 5/1 ARM average rate was 2.76%.

Industrial production outpaces expectations in June – Industrial production rose 0.6% in June, it’s largest increase in 11 months, according to the Federal Reserve. Economists had forecasted a 0.3% increase. Robust auto production lifted the consumer durables category, as the output of consumer energy products also jumped. Manufacturing output rose 0.4% in June. But in the second quarter, factory output fell at an annual rate of 1%. The index for utilities climbed 2.4% due to warmer weather that increased demand for air conditioning. 

Retail sales beat expectations in June – The Commerce Department Reported that retail sales rose 0.6% in June. It was the third straight month of increases after sales seemed to be stalling in the beginning of the year. Sales are now up 2.7% from one year ago. Economists had expected just a 0.1% increase. 

Home sales figures for June should be available next week. They will include, number of sales, median price changes, and home inventory levels.

Have a nice weekend!
Syd 

Employers add 287,000 new jobs in June – The Labor Department reported that U.S. employers added 287,000 net new jobs in June, easing fears of that job growth was faltering, after 3 months of lackluster growth. June marked the largest number of new jobs created since October 2015. The unemployment rate increased from 4.7% in May to 4.9% in June, as more workers entered the workforce. Another positive in the report was that wage growth, which has shown signs of improvement after many years of stagnation, was up 2.6% from one year ago. 

Stocks up again this week – S&P and DOW approach record highs – Stocks surged yesterday following the release of a surprisingly strong jobs report. Over the past few months job gains have been very disappointing, suggesting that job growth was faltering. This report, the strongest gains since last October, eased some fears. Stocks have made up all their loses and more following the Brexit vote over the last two weeks. The Dow Jones Industrial Average closed the week at 18,146.75. up from 17,949.37 last Friday. The S&P 500 closed the week at 2,129.90 up from 2,102.95 last week. The NASDAQ closed the week at 4,956.76, up from last week’s close of 4,862.57.

Historically low Bond yields drop again this week – The 10 year U.S. Treasury bond yield closed the week at 1.37%, down from 1.46% last Friday. The 30-year U.S. Treasury bond closed at 2.11%, down slightly from 2.24% last week. Mortgage rates follow bond yields so this is great news for loan rates.

Mortgage rates at historic low levels – Mortgage rates fell again this week. The Freddie Mac Primary Mortgage Survey released on July 7, 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 3.41%. The 15-year fixed average rate was 2.74%. The 5/1 ARM average rate was 2.68%.  

Realtor.com chief economist predicts best summer for the housing market in a decade – Jonathan Smoke, chief economist for Realtor.com reported that following the strongest spring in 10 years, the residential real estate market should continue to see growth throughout the summer despite some growing economic headwinds. Through May, year to date home sales (that’s non-adjusted existing and new-home sales combined) are up 6 percent, over the last year, which is the best year since 2007, according to Smoke’s calculations using the NAR and Commerce Department data. 

Have a great weekend!