Weekly Economic Update | Week Ending September 16, 2023

Stock markets were roughly unchanged this week – Investors weighed another week of data that showed renewed strength in the economy. Key data included: The Consumer Price Index (CPI) increased by 3.7% in August from one year ago. That’s up from a 3.2% year-over-year increase in July and a 3% increase in June, marking a second consecutive monthly increase after dropping every month from July 2022 to June 2023. Oil prices hit their highest point since last November. Retail sales were also better than expected, up 2.5% from last August. Retail sales were up 2.2% in June and July from a year earlier. The economy is just not cooling the way the Fed expected when they began their tightening measures over a year ago. Investors, who felt that the Fed was done or nearly done raising rates, now feel that there will be at least one more increase in the coming months. They also feel that rates will remain high for longer than previously expected. Bond yields and mortgage rates are now at their highest levels in 20 years. Experts expect mortgage rates to drop significantly once we see some signs of slowing in the economy. The Dow Jones Industrial Average closed the week at 34,618.24, up 0.1% from 34,576.59 last week. It is up 4.3% year-to-date. The S&P 500 closed the week at 4,450.32, down 0.2%from 4,457.59 last week. It is up 15.9% year-to-date. The Nasdaq closed the week at 13,704.34, down 0.4% from 13,761.53 last week. It is up 30.9% year-to-date.

U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 4.33% up from 4.26% last week. The 30-year treasury bond yield ended the week at 4.42%, up from 4.33% last week. We watch bond yields because mortgage rates follow bond yields.

Mortgage rates – The Freddie Mac Primary Mortgage Survey reported that mortgage rates for the most popular loan products as of September 14, 2023, were as follows: The 30-year fixed mortgage rate was 7.18%, up slightly from 7.12% last week. The 15-year fixed was 6.51%, almost unchanged from 6.52% last week.

Home sales data from the California Association of Realtors and the National Association of Realtors will be released next week.

Have a great weekend!

January 25, 2019January 25, 2019

2018 Year End Economic Update

2.6 million new jobs were added in 2018 as unemployment dropped to a 40-year low – The Bureau of Labor Statistics reported that U.S. employers added 312,000 new
jobs in December. This shocked analysts that had forecasted 178,000 new jobs.
There were 2.6 million jobs added in 2018, up from 2.2 million new jobs in 2017. The unemployment rate rose to 3.9% from 3.7% in November, a 40-year low, as 419,000 new workers entered the workforce. Optimism about finding an acceptable job and
higher wages were credited with expanding the workforce. Wages rose 3.2% from
one year earlier, matching October’s year over wage gains which marked the largest
year over year wage gain since April 2009.

Stock markets ended the year lower in 2018 – After hitting all-time highs in
September, which marked the longest bull market in history, stocks took a downturn in the last quarter of the year. December marked the worst December drop since the Great Depression as fears of a trade war, political uncertainty, slowing economic activity overseas, and higher interest rates made investors more cautious. The Dow Jones Industrial Average ended 2018 at 23,327.46, down from 24,719.22 at the close of 2017.The S&P 500 closed the year at 2,506.85, down from 2,673.51 at the end of 2017. The NASDAQ closed at 6,635.28, down from 6,903.39 on December 31, 2017.

U.S. Treasury Bond Yields higher in 2018 – The 10-year U.S. treasury bond closed the year at a 2.69% yield, up from 2.40% on December 31, 2017. The 30-year treasury yield ended the year at 3.02%, up from 2.74% on December 31, 2017.Mortgage Rates higher in 2018 – The December 28, 2017 Freddie Mac Primary Mortgage Survey reported that the 30 year fixed mortgage rate average was 4.55%, up from 3.99% on December 29, 2017. The 30-year fixed rate was over 5% in October before
declining in November and December. The 15-year fixed was 4.01%, up from 3.44% . last December. The 5-year ARM was 4.00%, up from 3.55% at the close of 2017. Fortunately, rates dropped in the final quarter. The 30-year hit 5% in September.

Year over year price gains moderated in 2018 after 7 years of price gains. For the first 7 months of the year we saw the same month year over year price increases of
6-8%, but by years end those prices were just 1.5% above the same month one year earlier – The California Association of Realtors reported that existing home sales
totaled 372,260 in December on a seasonally adjusted annualized basis. That was
down 11.6% from last December. It marked the fewest sales in a month since January 2015. The statewide median price was $557,600, up 1.4% from December 2017.
On a regional basis Los Angeles County’s median-price of $588,140 was up 1.8%
from last December. Orange County had a median price of $785,000, down 0.1%
from December 2017. Ventura County’s median price of $640,000 was down 0.8% from last December. Inventory levels also continued to rise. Active listings have
increased 30% from 2017. The unsold inventory index hit record lows before moving up steadily in the last 9 months of 2018. There was a3.5-month supply of homes
listed in California, up from a 2.5-month supply in December 2017. It should be noted that a “normal market” has a six-month supply of homes listed, so inventory levels
which are well above the all-time lows of 2017 are still at low historical levels.
Los Angeles County had a 3.5-month supply, up from a 2.4-month supply last
December. Orange County had a 4-month supply, down from 2.6 months last
December. Ventura County had a 5.5-month supply, up from a 4-month supply in
December 2017.

December 18, 2018

Economic update for the week ending December 15, 2018

Stocks ended the week down

Signs of a slowing economy in Asia and Europe wiped out gains earlier in the week as stocks fell 2% on Friday. Earlier in the week it looked like stocks would end the week higher as investors felt more optimistic that a trade deal would be worked out with China after President Trump tweeted that progress has been made, and talks with China have been productive. An inflation report showed inflation in check which lowers the risk of higher interest rates. Unfortunately, Friday’s repots that showed weakness in Asia and Europe wiped out the earlier weekly gains, and stocks had another losing week. The Dow Jones Industrial Average closed the week at 24,100.51, down from 24,338.94 last week. It was down 1.2% for the week and is now down 2.5% year-to-date. The S&P 500 closed the week at 2,599.95, down from 2,633.08 last week. It was down 1.3% for the week and is down 2.8% year-to-date. The NASDAQ closed the week at 6,910.77, down from 6,969.25 last week. It was down 08% for the week and down 0.1% year-to –date.

Treasury Bond Yields unchanged

The 10-year treasury bond closed the week yielding 2.89%, up slightly from 2.85% last week. The 30-year treasury bond yield ended the week at 3.14%, unchanged from 3.14% last week. We watch treasury bond yields because mortgage rates follow bond yields.

Mortgage rates dropped to the lowest level in three months

The December 13, 2018 Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 4.63%, down from 4.75% last week. The 15-year fixed was 4.07%, down from 4.21% last week. The 5-year ARM was 4.04%, down from 4.07% last week. Rates ended the week even lower.

November 4, 2018November 4, 2018

Economic update for the month ending October 31, 2018

U.S. Employers added 250,000 new jobs in October:

Wages grow at fastest pace in almost 10 years – Unemployment remains at lowest rate since 1969 – The Department of Labor Statistics reported Friday that 250,000 new jobs were added in October. That eclipsed the 190,000 new jobs analysts had expected. Job growth has now hit a record of 97 straight months. The unemployment rate was unchanged at 3.7%, the lowest national unemployment rate in 49 years. Average hourly wages were up 3.1% in October from last October. That was the largest year over gain in almost 10 years.

California employers added 13,200 new jobs in September :

The California Employment Development Department reported that 13,200 new jobs were added in September. California has now added an average of 29,400 new jobs a month for 103 consecutive months. The state’s unemployment rate dropped to 4.1%, the lowest rate on record.

U.S. stocks saw their largest monthly loss in 10 years in October:

Although most companies reported quarterly profits that beat or were in line with expectations, the few like Amazon, Square, Hasbro, Domingo’s and others that reported disappointing results scared investors. The Dow Jones Industrial Average closed the month at 25,115.76, down from 26,458.31. last month. The S&P 500 closed the month at 2,711.74, down from 2,913.98 on September 30. The NASDAQ closed the month at 7,305.90, down from 8,046.35 last month.

Treasury Bond Yields rise:

The 10-year treasury bond closed the month yielding 3.05%, up from 2.86% on August 31, 2018. The 30-year treasury bond yield ended the month at 3.19%, up from 3.02% at the end of August.

Mortgage rates higher in October:

The November 1, 2018 Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 4.83%, up from 4.72% on September 27, 2018. The 15-year fixed was 4.23%, up from 4.16% on September 27. The 5-year ARM was 4.04%, up from 3.97% at the end of September.

GDP up 3.5% in third quarter:

The U.S. Bureau of Economic Analysis announced that the first reading of the nation’s gross domestic product (GDP) rose by 3.5% in the third quarter of 2018. That beat expectations of a 3.4% rise, but was well below the 4.2% increase registered in the second quarter of 2018. The report also said that The PCE price index, a key indicator of inflation, rose at a 1.6% annual rate in the quarter. That was well below the 2.2% annual increase analysts forecasted. Consumer spending, which accounts for about two thirds of the U.S. economy grew by 4% in the third quarter. That marked the largest increase since the fourth quarter of 2014.

September Nationwide Existing Home Sales:

Data released this week from The National Association of Realtors showed that total existing home sales fell again in September. The number of existing homes sold in September fell 3.4% from August, and are down 4.1% from one year ago. The median price paid for a home in The U.S. was up 4.2% from last September. That marked the 79th straight month of year over increases. The unsold inventory index is at a 4.4 month supply, up slightly form a 4.2 month supply one year ago.

September California Existing Home Sales:

The California Association of Realtors reported that existing single family home sales totaled 382,550 in September on a seasonally adjusted annualized rate. That was down 4.3% from August and down a staggering 12.4% from last September, when sales totaled 436,920 on a seasonally adjusted annualized rate. The median price paid for a home in California was $587,850, up 4.2% from September 2017.On a more regional level the median price increased 4.7% in Los Angeles County, 10.6% in Ventura County, and 3.3% in Orange County from one year ago. Inventory levels continued to rise after hitting historic lows in 2017. The unsold inventory index in California stood at a 4.2 month supply in September, up from a 3.3 month supply in September 2017. Inventory levels have now increased for 6 straight months and are up 20.4% from one year ago. Listings are at the highest level in 31 months. Los Angeles County has a 4.4 month supply, up from a 3.1 month supply last September. Orange County has a 4.3 month supply, up from 3.1 months last September. Ventura County had a 6.3 month supply of homes, up from a 4.7 month supply one year ago.

Best,

Syd Leibovitch

Rodeo Realty Inc.

9171 Wilshire Blvd. Suite 321

Beverly Hills, California 90210

CA DRE # 00858724