Monthly Economic Update | Month Ending August 31, 2023

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Stock markets dropped in August – Although it has been an incredible year of stock market gains, August marked a challenging month. Stock markets dropped due to fears of higher interest rates. Bond yields and mortgage rates rose to the highest levels in 20 years as economic data suggested that the economy was showing no signs of slowing. The Fed increased interest rates and gave hawkish comments suggesting that high rates would remain at these levels for longer than many experts expected. In the last week of the month there was news which suggested the economy may finally be reacting to the Fed’s tightening campaign. Some inflation gauges showed moderation, second quarter GDP was revised downward to 2.1% growth, from its initial reading of 2.4%, and consumer confidence took a sudden drop. The Dow Jones Industrial Average closed the month at 34,721.91, down 2.4% from 35,559.53 on July 31st. It is up 4.7% year-to-date. The S&P 500 closed the month at 4,507.66, down 1.8% from 4,588.96 last month. It is up 17.4% year-to-date. The NASDAQ closed the month at 14,034.97, down 2.2% from 14,346.02 last month. It is up 34.1% year-to-date.

U.S. Treasury bond yields – The 10-year treasury bond closed the month yielding 4.09%, up from 3.97% last month. The 30-year treasury bond yield ended the month at 4.20%, from 4.02% last month. We watch bond yields because mortgage rates often follow treasury bond yields. Both the 10-year and 30-year closed the month about .25% below their highest levels for the month after dropping in the last week of the month.

Mortgage rates – The Freddie Mac Primary Mortgage Survey reported that mortgage rates as of August 31, 2023, for the most popular loan products were as follows: The 30-year fixed mortgage rate was 7.18%, up from 6.81% at the end of July. The 15-year fixed was 6.55%, up from 6.11% at the end of July.

Job growth was strong in August, but the unemployment rate increased – The Department of Labor and Statistics reported that 187,000 new full-time jobs were added in August. That was in line with economists’ expectations. While roughly the same number of new jobs were created as reported in July, July was revised downward by 30,000 to 157,000 today. The unemployment rate increased to 3.8% in August, up from 3.5% in July, its lowest level in almost 60 years, as more workers entered the workforce. Average hourly wages increased 4.4% from one year ago, unchanged from the previous month. The labor-force participation rate (the share of workers with a job or actively looking for a job) was 62.8%, up from 62.6% in July. Experts feel that perhaps people’s COVID stimulus savings are running out to explain more workers entering the workforce. The labor-force is still well below its 63.4% level before the pandemic.

Home sales figures are released on the third week of the month by the California Association of Realtors and the National Association of Realtors. This is the July home sales data.

U.S. existing-home sales – The National Association of Realtors reported that existing-home sales totaled 4.07 million units on a seasonally adjusted annualized rate in July, down 16.6% from an annualized rate of 4.88 million in July 2022. The median price for a home in the U.S. in July was $406,700, up 1.9% from $399,000 one year ago. There was a 3.3-month supply of homes for sale in July, up from a 3.2-month supply last July. First-time buyers accounted for 30% of all sales. Investors and second-home purchases accounted for 16% of all sales. All-cash purchases accounted for 26% of all sales. Foreclosures and short sales accounted for 1% of all sales.

California existing-home sales – The California Association of Realtors reported that existing-home sales totaled 269,180 on a seasonally adjusted annualized basis in July. That marked the tenth straight month on sales dropping under 300,000 on an annualized basis. The number of sales is down approximately 40% from July 2021. Year-to-date the number of homes sold was down 30.3% from the first seven months of 2022. The statewide median price paid for a home in July was $832,390, up 0.2% from $830,870 last July. There was a 2.5-month supply of single-family homes for sale in July, down from a 3.1-month supply one year ago.

The graph below has sales data for Southern California by region. This was compiled by the California Association of Real Estate.

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 30The 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, 2018The 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 County10.6% 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 monthsLos 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