Economic update for the week ending March 24, 2018

Stocks drop 6% in the worst week since January 2016 - U.S. Stock markets fell 6% this week as  investors feared that new tarriffs on imports could start a global trade war. The Federal Reserve also raised their benchmark interest rates. This was expected just a few weeks ago, but many experts felt the Fed would hold off on an increase because stocks have been so volatile in the last couple of weeks. Stocks have dropped 10% in just  a month. TheDow Jones Industrial Average closed the week at 23,533.20, downfrom last week’s close of 24,946.51.  It is down 4.8% year to date. The S&P 500 closed the week at 2,588.26, down from 2,752.01 last week.  It's down 3.2% year to date. The NASDAQ closed at 6,992.67, down from 7,484.99 last week. It is up 1.3% year to date. Treasury Bond Yields -  Bond yields lower this week - The 10 year treasury bond closed the week yielding 2.82%, down from 2.85% last week. The 30-year treasury bond yield ended the week at 3.06%, down from 3.08% last week. We watch bond rates because mortgage rates follow bond rates.

Mortgage Rates stable this week - The March 22, 2018 Freddie Mac Primary Mortgage Survey reported that the 30 year fixed mortgage rate average was 4.45%, unchanged from last week’s 4.44%. The 15 year fixed was 3.91%, unchanged from 3.90% last week.The 5-year ARM was 3.68%, unchanged from 3.67% last week.
California existing home sales pick up in February - The California Association of Realtors announced that existing home sales totaled 422,910 on a seasonally adjusted annualized rate in February. That represented a 3.3% increase from the number of sales in January, and a 5.4% increase from last February's number of sales. Prices also increased with the statewide median price $522,440, an increase of 8.8% from one year ago. After hitting a 14 year low in December, the number of homes for sale increase for a second straight month. The unsold inventory index rose to a 3.9 month supply of homes in February, up from a 3.6 month supply in January. There was a 4 month supply of homes for sale in February 2017.

Economic update for the month of June and week ending July 2

Stocks have a wild week and end the month higher in June - Stock markets were fairly stable in June until the last week when stocks fell sharply after The British people voted to leave the European Union.  By Monday all markets had dropped significantly, but the markets rallied to end the month up making up all the losses in the last three days.   The Dow Jones Industrial Average closed the month at 17,929.99, up from it's close last month of 17,787.31 on May 31. The S&P 500 closed the month at 2,098.86, just slightly above 2,096.95 on May 31. The NASDAQ closed May 31 at 4,842.67, down from 4,948.05 at the end of May.

For the week ending July 2 - Stocks post best 4 day streak since February- The Dow Jones Industrial Average closed the week at17,949.37, up significantly  from 17,400.75 last Friday. The S&P 500 closed the week at  2,102.95, up from 2,037.41 last week. The NASDAQ closed the week at 4,862.57, also up from last week's close of 4,707.98.

Bond yields fall to lowest levels in decades – The 10 year U.S. Treasury bond yield closed Juneat 1.49%, down significantly from 1.85% on May 31. The 30 year U.S. Treasury bond closed June 30 at 2.30%, down from 2.63% at the end of May. Mortgage rates follow bond rates so we watch bond rates carefully.

Bond yields drop again this week – The 10 year U.S. Treasury bond yield closed the week at1.46%,down  from 1.52% last Friday.  The 30-year U.S. Treasury bond closed at 2.24%,down slightly from 2.42% last week.

Mortgage rates at historic low levels - The Freddie Mac Primary Mortgage Survey released on June 30, 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 2.70%. 

California's unemployment rate dips to 5.2% -  The Employment Development Department reported that California employers's added 15,200 net new jobs in May. While the number of new jobs added was below what analysts expected, the unemployment rate fell from 5.3% in April to 5.2% in May.  The unemployment rate in May 2015 was 6.4%, so being at 5.2% is a 1.2% drop year over year!
Federal Reserve leaves rates unchanged in June - Amid worries of slowing job growth, The Federal Open Market Committee declined to raise it's interest rate target at this week's two day meeting from 0.5%. Fed chairperson, Janet Yellen signaled late last year that there could be as many as 6 increases in 2016.  As the labor market growth has slowed and economic growth no longer at last year's levels, Fed officials are signaling that there may only be one or two increases in 2016.

California existing home sales and prices up in May - The California Association of Realtors reported that existing home sales in California totaled 410,190 in May on a seasonally adjusted annual rate.  That is up 0.6% from April and down 3.2% from last May.  Tight inventory has impacted the number of sales, as there was just a 3.4 month supply of homes on the market in May, down from 3.5 months in April. A 6-7 month supply is considered normal. 

The median price paid for a single family home in California rose to $518,760 in May from $509,590 in April.

Pending home sales rise in California  - The California Association of Realtorsreported on Thursday that statewide pending existing home sales rose 3.8% in Mayfrom May 2015. This was welcome news as year over year closed home sales dropped dropped in May on a year over year basis. They also reported that pending home sales in Southern California rose 5.6% on a year over year basis compared to May 2015.  We look at pending sales to gage what closed sales will be a month or two later when they close.

U.S existing home sales hit their highest pace in over a decade - The National Association of Realtors reported that total existing home sales, which include single family homes, condos, town-homes, and co-ops, were up 4.5% in May from May 2015. The total number of sales on a annualized adjusted rate was 5.53 million homes in May 2016.  May was the highest annual pace since February 2007 when sales hit 5.79 million.

U.S. Pending home sales lower in May - After three months gains in pending home sales, measured by homes that went under contract, The National Association of Realtorsannounced that pending home sales in May slipped 3.7% from April's figures.Year over year pending sales were down 0.2% from last May.  Tight inventory is thought to be the reason for sales being off. Pending sales which include resale, not new homes, include single family homes, condos, town houses, and co-ops.

The markets are all waiting for the monthly jobs report.  They come out on the first Friday of every month, but not when Friday is the first of the month. Next Fridaywe will have June's job figures.

Economic update for the week ending May 7, 2016

U.S. job growth slows - The Labor Department reported that employers added 160,000 net new jobs in April. This fell short of the  200,000 net new jobs analysts had expected. The unemployment rate held steady at 5%, an 8-year low. Retail sales lost 3,000 net jobs.  This was especially surprising after retailers' adding 39,000 net new jobs in March, and 157,000 in the first quarter of 2016. Construction added just 1,000 net new jobs after adding 41,000 last month. Those two sectors alone account for April's decline.  The report showed that wage growth is finally beginning to show signs of improvement. Average hourly wages ticked up 8 cents an hour, after increasing 6 cents an hour last month. Wages are up 2.5% for the past 12 months ending April 30, after remaining fairly stagnant since the recession.

Stocks lower this week - Stocks dropped for a third week in a row as renewed concerns of persistent weakness overseas made investors cautious. This followed a disappointing first quarter GDP report last week and some earnings reports that were not as robust as expected.  Stocks also dropped Thursday when ADP, the nation's largest payroll company suggested that Friday's jobs report would be disappointing. It was, yet stocks actually recovered slightly, because investors hoped that it would give pause to the Federal Reserve to leave interest rates unchanged in June rather than raise them for only the second time since 2006. TheDow Jones Industrial Average closed the week at 17,740.63, down from 17,763.64 last week. The S&P 500 closed the week at 2,057.41, down from 2,065.30 last week. The NASDAQ closed Friday at 4,736.16 down from 4,775.36 last week.

Bond yields slightly lower again this week - The 10 year U.S. Treasury bond closed Friday yielding 1.79%, slightly down from 1.83% last week. The 30 year U.S. Treasury bond closed Friday yielding 2.62%, also slightly lower than2.66% last week. Mortgage rates follow bond yields so we watch bonds carefully.

Mortgage rates lower this week - The Freddie Mac Primary Mortgage Survey released on May 5, 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 3.61%. The 15-year fixed average rate was 2.88%. The 5/1 ARM average rate was 2.80%.

Week ending February 5, 2016 economic update

U.S. Employers add 151,000 jobs in January - Unemployment rate drops to 4.9% - The Labor Department reported Friday that employers added 151,000 non-farm jobs in January. This was well below the 190,000 expected, which could signal slowing overseas has finally affected employer confidence. A robust 4th quarter of job growth in 2015 showed that employers's confidence had not been affected by slowing overseas. Perhaps that is about to change is the feeling of some analysts. Others were encouraged by stronger growth in the manufacturing sector than expected and shrugged off the lower number as offsetting stronger than expected job growth over the last few months, and offsetting some temporary holiday seasonal jobs lost. We will see which analysts are right in the coming months.Hourly wages rose showing a 2.5% annual increase in January. This was the most positive part of the report. Theunemployment rate also fell from 5% in December to 4.9% in January, its lowest level in 8 years.

Stocks sell off following U.S. jobs report - Stocks sold off on Friday following the announcement of a disappointing jobs report. The dollar also strengthened after falling earlier in the week.  The strong dollar is a concern for companies that sell products overseas. Oil prices also dropped which had risen over the past two weeks.  All in all not great news for investors, yet the drop over the past week was not very much.The Dow Jones Industrial Average closed Friday at 16,204.97, down from 16,466.30 last week. TheS&P 500 closed the week at 1,880.05, down from 1,940.24 last week. The NASDAQ closed Friday at 4,363.14, down from 4,613.95 last week.

Bond yields drop -  The 10 year U.S. Treasury bond yield closed Friday at 1.84%, significantly lower than 1.94% last week.  The 30 year U.S. Treasury bond yield closed Friday at 2.67%, down from 2.75% last week.

Mortgage rates at lowest levels in 2 years -Uncertainty has caused investors to move money into lower returning safer investments like U.S. treasury bonds and mortgage securities. At the same time central banks around the world have dropped rates. Our bond and mortgage security rates, while historically low,  offer a decent return comparatively. This has continued to push rates lower. The 30 year fixed rates below loan amounts of 419,000  are around 3.625%. 30 year rates for loans above 419,000 are about 3.875%. The 15 year fixed was around 3.10%. The 5 year was around 2.625%.

The real estate market seems to be in full swing! I'm seeing more listings come out, but they are selling so quickly, if priced right, that our historically low inventory levels seem to be here to stay. That is driving prices up, yet not at the levels seen a couple of years ago. I'd expect most of the years price appreciation to occur in the next few months, and prices should level off in late summer as they did last year. Interest rates are at the lowest levels in a couple of years, which are close the lowest rates in decades. If you are buying, buy now! If you are not buying, you should! If you are going to move up, I'd do it now! If you haven't been thinking of moving up, you should!

Week ending January 30, 2016 economic update

Stocks rally on hope that lower rates overseas will stimulate economies abroad - While central banks around the world have dropped rates to stimulate their economies investors are becoming more optimistic that a global slowdown is likely to reverse. Japan actually lowered rates from 0% to negative rates! I guess the answer to: once you are at 0% how can you drop rates to stimulate the economy?, has been answered!  Negative rates mean banks are charged to hold money on deposit with the central bank, and paid to borrow money from the central bank. The theory is that the cheaper money is for banks the more likely they will loan it out at low rates. With negative rates it actually costs banks money not to loan it out! By making money cheaper to borrow and loosening up requirements companies borrow more.  They use this to expand and invest which stimulates the economy.  Oil also rose this week which helped energy stocks. Oil dropped to near $30 per barrel on Tuesday and rose from there to end the week just below $35 a barrel. Oil ended the week up about $4 per barrel from last Friday. As quarterly earnings have begun to be reported, most U.S. Companies that have reported earnings were above expectations. The Dow Jones Industrial Average closed Friday at 16,466.30 up from 16,093.51 last week. TheS&P 500 closed the week at 1,940.24 up from 1,906.90 last week. The NASDAQ closed Friday at 4,613.95 up from4,591.18 last week.

Bond yields drop -  Japan's central bank announcement that it was dropping its benchmark rate from 0% to negative rates not only boosted stocks it drove money into U.S. Bonds which drove yields down. Bond yields remained near the lowest levels which have been reached from time to time over the past few years. The 10 year U.S. Treasury bond yield closed Friday at 1.94% ,  significantly lower than 2.07% last week.  The 30 year U.S. Treasury bond yield closed Friday at 2.75%, down from 2.83% last week.

Mortgage rates drop to lowest levels in 2 years -As central banks around the world have dropped rates our bond and mortgage security rates, while historically low,  offer a decent return comparatively. This has pushed rates lower. The 30 year fixed rates below loan amounts of 419,000  are around 3.625%. 30 year rates for loans above 419,000 are just under 4%. The 15 year fixed was around 3.10%. The 5 year was around 3%.

I will be sending a month end summary that will detail the full month in the next couple of days. We get January jobs numbers next Friday. Stay tuned!

January 16, 2016 economic update

Stocks continue to fall in 2016 - Stocks tumbled for a second week due to falling oil prices, the strong dollar and weakness overseas.  Oil dropped to under under $30 a barrel, a level not seen 2003.  This caused energy sector stocks to drop significantly further.  The dollar rose against all other currencies. It is at the highest level in nearly 20 years against many currencies. This also spooked investors as a strong dollar makes U.S. goods more expensive abroad.  China's Shanghai Index is down 20% and our markets have dropped about 10% so far in 2016. The Dow Jones Industrial Average closed Friday at 15,988.08, down sharply from 16,346.45 last week. The S&P 500 closed the week at 1,880.30, down from 1,922.03 last week. The NASDAQ closed Friday at 4,488.82 also sharply down from 4,643.63 last week.
Bond yields continue to fall - As fear sets in investors have pulled money from stocks and purchased U.S. treasury bonds.  This happens when investors feel that a very low return is better than losing money if stocks drop further. Bond yields are approaching the lowest levels which have been reached from time to time over the past few years. The 10 year U.S. Treasury bond yield closed Friday at 2.03%, down from 2.13% last week.  The 30 year U.S. Treasury bond yield closed Friday at 2.81%, also down from 2.91% last week.
Mortgage rates fall this week - The 30 year fixed rates below loan amounts of 419,000 fell to 3.75%. 30 year rates for loans above 419,000 are just around 4%. The 15 year fixed was around 3.10%. The 5 year was around 3%.
California posts strong sales and price increases in 2015 - The California Association of Realtorsreported that their preliminary figures indicate that there were 407,060 resale single family homes sold in 2015. That marks a6.5% increase from 382,720 resales in 2014. There were 9.6% more December sales than November.  November had unusually low closing figures which were attributed to delays caused by implementation of new disclosure requirements.Condominium and townhouse sales were up 25.1% from November and were 10.2% higher than last December.The statewide median price of a home was $489,310, which was up 2.6% from November and 8% higher than one year ago! The median price is the price in which half the homes sell for more and half sell for less. The unsold inventory index fell in December to a2.7 month supply of homes, a historically low figure. A normal market had a 6-7 month supply. Such a low supply of inventory could cause prices to spike!

2015 year end economic report with January 8, 2016 update

U.S. Employers add 2.65 million new jobs in 2015 - The Labor Department reported that employers added 292,000 new jobs in December.  This beat expectations of 200,000. The unemployment rate held steady at 5%, a 7 1/2 year low, as more workers entered the workforce. The unemployment rate at the end of 2014 was 5.6% down from 6.7% at the end of 2013. U.S. Unemployment peaked in October 2010 at 10%. For the last quarter of 2015 the average monthly job growth was 284,000 new jobsa month for the 3 month period. The U.S. economy added 2.65 million jobs to payrolls in 2015 and 3.1 million jobs in 2014, the two best years for U.S. employment growth since 1999. The only sector that lost jobs for the year was oil, gas, and mining which lost 129,000 jobs in 2015 as low oil prices have caused U.S. Companies to cut oil production.The report revealed that while job growth has been quite robust wage growth has disappointed analysts. Average hourly earnings, fell slightly in December to $25.24, although wages grew 2.5 percent between January and December. Usually, when the unemployment rate hits these low levels wages rise. Stocks end the year mostly unchanged from 2014 - Despite robust job growth, record auto sales, strong retail sales stocks were mixed for the year. We begin 2016 with the same issues that hurt stocks in 2015. Those were the drop in oil prices which caused energy stocks to tumble throughout the year, and the strong dollar, which hurt exports, and manufacturing, by making goods made by American companies more expensive overseas. Stocks in these sectors were impacted. The Dow Jones Industrial Average closed the year at 17,425.03, down from  2014’s close of 17,823.07.  This was the DOW's first annual loss since the stock market crashed in 2008.The S&P 500 closed the year at 2,043.94, about the same as 2014's close of 2,058.90. The NASDAQ closed at 5,007.41, up from last year’s close of 4,736.05  The tech-dominated Nasdaq index rose 5.7% for the year, the only winner in 2015!January 8, week end - Stocks have worst week since 2011 - DOW drops 1,000 points - DOW and S&P down 6% for the week- Chinese stock markets collapsed this week. Their markets were shut down twice after drops so 7% each. The government stepped in an assured investors they would not push to devalue their currency further, and, depending on the report you read, may have purchased stocks to stem the fall. By the end of the week the Shanghai Composite Index fell more than 10%. Markets around the world followed, including ours. On Friday the U.S. jobs report which showed that the U.S. Economy appears to be still expanding stabilized markets here and in Europe. ( although our markets sold off late in the day and closed down) Asia markets had already closed for the night before the report was released. Oil dropped further hitting as low as $32 a barrel on reports of a world wide oversupply. This was over a 10% drop for the week. This also hurt the markets, especially energy stocks. The dollar strengthened further. It rose all week and rose .04% on Friday alone after the strong jobs report. This and further slowing in China hurt stocks of companies which sell goods to China.  The Dow closed January 8, 2016 at 16,346.45, down sharply from 17,425.03 the previous week. The S&P 500 closed the week at 1,922.03, down from 2043.94 the previous week. The NASDAQ closed Friday at 4,643.63, also sharply down from 5,007.41 the previous week.

Oil prices continue to tumble - Crude oil ended 2015 at $37.04 a barrel down from $60.48 at the close of 2014, a 38% decrease. The lowest since the depths of the recession in 2009. Oil prices were at $101 a barrel in June of 2014. Many parts of the country have gas prices under $2.00 per gallon. California is about $2.60 per gallon, due mostly to higher taxes, and closures at California refineries. The energy sector  closed out the year down nearly 24%, making it the worst performer in the S&P 500.

January 8, 2016 - Oil prices fall further Oil hit lows of $32 per barrel this week. Down over 10% this week.

Strong dollar hurts U.S. Companies - The dollar strengthened against nearly all other currencies which made U.S. goods more expensive overseas, and foreign goods less expensive at home. This hurt manufacturing as U.S. Companies cut back on products intended to be experts abroad.

U.S. auto sales highest ever in 2015 - Americans bought more due to solid December gains by the biggest automakers.

Treasury Bond yields increase in 2015 – The 10-year Treasury bond closed the year at 2.27% up from 2.17% at the close of 2014. The 30-year treasury yield was 3.01% on Dec. 31, up from 2.75% last December 31!

January 8, 2016 - Bond yields fall this week - As stocks tumbled investors bought treasury bonds looking for safety. The 10 year U.S. Treasury bond yield closed Friday at 2.13%, down from 2.27% last week.  The 30 year U.S. Treasury bond yield closed Friday at 2.91%, also down from 3.01% last week, Dec. 31. These were the lowest levels since October.

U.S. Existing home sales lowest in 19 months to close the year - New disclosure regulations cause delays - The National Association of Realtors reported that the number of existing homes sold in November dropped 10.5% from October.  Much of the drop in closings occurred due to the new "know before you owe" TRID disclosure regulations that apply to all loans applications taken after October 3, 2015.

Mortgage Rates – The Freddie Mac Primary Mortgage Survey reported that: The 30 year fixed mortgage rate average for the end of the year was 4.01%, a jump from 2014 close at 3.73%. The 15 year fixed was 3.24%, also up from last year’s close of 3.05%. The 5-year ARM was 3.08%, up from 2.98, at end of 2014. The 1 yearARM was 2.68%, and was 2.39% last December 31.Jumbo rates for loans over $419,000 are 1/8% to ¼% higher than the rates above.

January 8, 2016 -Mortgage rates fall this week - The 30 year fixed rates below loan amounts of 419,000 fell to 3.875%. 30 year rates for loans above 419,000 are just above 4%. The 15 year fixed was around 3.10%. The 5 year was around 3%.

Economic update for the week ending December 5, 2015

211,000 New jobs created in November - The Labor Department reported that 211,000 net new jobs were created in November.  Investors interpreted this robust number as confirmation that the economy is growing at a steady pace.  Wages were also up with the average hourly wage up 4 cents to $25.25 after rising 9 cents an hour in October. Year over year hourly wages were up 2.3% in November from November 2014. This is above the inflation rate, and was interpreted as another positive sign. Theunemployment rate held steady at 5%, a 7 year low.Experts felt that workers are more confident they would find a job because 273,000 more people entered the workplace bringing the labor participation rate up to 62.5%. Another positive sign, yet still a historically low number.

Stocks surge following release of jobs report - Stocks surged Friday after the Labor Department reported that employers added 211,000 jobs in November. The Dow added 367 points for the day, its largest gain since September. This reversed a drop in stocks on Wednesday and Thursday due to lower oil prices, which has oil back down under $40 a barrel, and disappointment in the size of Europe's newly announced stimulus package. The  Dow Jones Industrial Average closed the week at 17,847.63, up from last week's close of 17,798.49. The S&P 500 closed the week at 2,091.69, unchanged from last Friday's close of 2,090.11.  The NASDAQ closed the week at 5,142.27, up fromlast week's close of 5,127.53.

meeting, did not cause rates to rise. It will be the first interest rate hike in nearly 10 years, which is actually a positive sign that the Fed feels that the economy is strong. December 15 - 16about the same as last week's close of 3.00%. Investors feel that a rate hike by the Fed is pretty much "built into" longer term rates. This was evident when the robust jobs report, which pretty much guarantees a Fed rate hike will be announced at the conclusion of the Federal Reserve 3.01%, yield closed Friday at The 30 year treasury bond last Friday. , almost unchanged from 2.22%2.27%, yield closed the week at 10 year treasury bond The -Treasury bonds yields unchanged

Home prices reach an all time high in 2015 in 1/3 of the nation - According to Realty Trac's October 2015 Home Sales Report, released this week, 33 major metro areas, which was 35% of all 94 metro areas analyzed, reached all time highs in 2015. The number of sales in the first 10 months of the year were up 6%, making the number of sales in the first 10 months of 2015 the highest in 9 years. The median sales price for all 94 areas analyzed was up 1% in October and 10% year over year. October marked the 44th consecutive month of year over year median price increases in their data. In individual areas analyzed, 90% showed increases in their year over year median prices in October over last October.

Mortgage rates unchanged  -  The 30 year fixed rates are around 4.00% for loans up to $417,000, and around 4.25% for loans over $417,000.  The 15 year fixed rate loans are about 3.375% for loans up to $417,000, higher loan amounts have rates that are around 3.5%. 5-Year ARM and 3–Year ARM rates are both around 3.25%.

Economic update for the week ending November 21, 2015

Stocks have best week in almost a year - In a surprise change stocks rose this week mostly on strength attributed to a perceived certainly that The Federal Reserve will raise in December.  Minutes released this week from the last Fed policy meeting stated that delaying the first rate hike since 2006  "could be interpreted as signaling lack of confidence in the strength of the U.S. economy." Stocks which dropped in August partly on anticipation of a rate increase in September, because higher interest rates increase corporate debt payments, fell even more sharply when it was announced that The Fed would not raise rates. This was because investors felt that The Fed was worried that economic growth was stalling.Historically low Fed rates which dropped to near near 0% in 2008 was to help get the country out of recession. Many experts have wondered why rates have been near 0% for such an extended period of time as the economy has improved significantly since he depths of the recession.At this point every meeting without a rate hike signals to investors that The Fed knows something that analysts don't foresee as a risk to the economy. The  Dow Jones Industrial Average closed the week at 17,823.81, up 579 points from last week's close of 17,245.24.  The S&P 500 closed the week at 2,089.17, up 66 points from last Friday's close of 2,023.04.  The NASDAQ closed the week at 5,104.92, up 177 points fromlast week's close of 4,927.98.

about the same as last week's close of 3.06%.3.02%,yield closed Friday at The 30 year treasury bond last Friday. , 2.28%2.25%, almost unchanged fromyield closed the week at 10 year treasury bond TheTreasury bond rates rose about .25% after the strong October jobs report on anticipation that The Fed will raise rates in December. Bond rates remained stable this week after minutes released by the Fed this week and comments by Fed members suggested that a rate hike would come in December.  It appears that a rate hike by the Fed is already "built into" bond prices, but it will be interesting to see what a first rate increase in almost a decade does to treasury bond rates. Mortgage rates usually follow treasury bond rates so treasury rates are something we watch closely.Treasury bonds yields stable for second straight week -

Mortgage rates stable -  The 30 year fixed rates are around 4.00% for loans up to $417,000, and around 4.25% for loans over $417,000.  The 15 year fixed rate loans are about 3.375% for loans up to $417,000, higher loan amounts have rates that are around 3.5%. 5-Year ARM and 3–Year ARM rates are both around 3.125%.

California adds 41,200 jobs in October - Unemployment rate lowest since 2007 - California'sunemployment rate fell to 5.8% in October, down from 5.9% in September. It marked the lowest rate since October 2007. At the depth of the recession in 2010, California's unemployment rate rose above 12%, higher than every state except Michigan and Nevada. Over the last 3 years the state has added jobs at a rate faster than all but 5 states. Over the past year California has added jobs at a rate of 2.9%, outpacing the national job growth rate of 2%. October's unemployment rate of 5.8% is even more impressive considering that just one year ago the state's unemployment rate was 7.2% last October.

California home sales and prices slide in October- The California Association of Realtors announced that sales of existing homes in California declined 5.1% in October from September levels. The number of sales were 1.3% higher than October 2014, the smallest year over year increase in 2015, fueling speculation that the housing market is stalling. Prices also moderated as the statewide median price dropped 1.3% from September, yet it was up a healthy 5.7% from October 2014. The unsold inventory index remained unchanged for a third month at a 3.7 month supply, a low inventory level.  I would consider this a seasonal slowing that is to be expected, yet it's possible that it has slowed a little more than seasonal due to some nervousness in the housing market.  It should be noted that October closings are some sold in August and September when the DOW lost 2,000 points. That made everyone nervous. Since October the DOW has made back that entire loss. I would think that sales numbers on a year over year basis to be stronger in November and December. I also fully expect sales to rebound and prices to begin to increase again soon after the new year.

Economic update for the week ending November 14, 2015

Low spending and inflation data released this week cause stocks to slide - The largest last 12 month drop in producer prices since the depths of the recession, and a weak retail spending report caused investors to pull back on stock purchases ending a rally of  6 straight weeks of  gains.  Stocks also probably suffered from the largest terrorist attacking since 9-11 when a coordinated attack hit Paris yesterday. The Dow dropped 202 points yesterday following the attacks. It was down 665 points for the week.The  Dow Jones Industrial Average closed the week at 17,245.24, down from last week's close of 17,910.33.   The S&P 500 closed the week at  2,023.04, down from last Friday's close of 2,099.20.  The NASDAQ closed the week at 4,927.88, downfrom last week's close of 5,147.12.
 

Treasury bonds yields mostly unchanged from last week - Weak inflation and spending data failed to convince investors that the Federal Reserve would hold off on increasing interest rates at the December meeting.  Most investors expect that after October's strong job growth and wage growth a rate increase is expected. The 10 year Treasury bond yield closed the week at 2.28%, slightly lower than 2.34% last Friday.  The 30 year treasury bond yield closed Friday at 3.06% about the same as last week's close of 3.09%.

Mortgage rates stable after rising last week -  The 30 year fixed rates are around 4.00% for loans up to $417,000, and around 4.25% for loans over $417,000.  The 15 year fixed rate loans are about 3.375% for loans up to $417,000, higher loan amounts have rates that are around 3.5%. 5-Year ARM and 3–Year ARM rates are both around 3.125%.

Retail sales flat in October - Retail sales rose just 0.1% in October according to the Commerce Department. Experts expected a 0.3% increase. Much of the drop was due to poor auto sales which were down 0.5%. Excluding auto sales retail sales grew just 0.2%, still below the amount expected. This is a sign that consumers may be pulling back on their spending, which could affect the 4th quarter GDP figures, which experts had expected would rebound after a disappointing 3rd quarter.

Consumer confidence higher than one month ago - The University of Michigan consumer sentiment index rose from 90.0 in October to 93.1 in early November. The report showed that consumers plan to increase spending slightly compared to those surveyed last month. This report did little to ease investors concerns about slowing growth in recent months.

Producer prices continue to fall - The Labor Department reported that its producer price index fell 0.4% in in October. For the 12 months ending October the PPI fell 1.6%, the largest decline in producer prices since the depths of the recession for a 12 month period ending in 2009. The Producer Price Index is a weighted index of prices measured within the wholesale markets, manufacturing industries, and commodities markets. 

Economic update for the week ending November 7, 2105

U.S. employers add 271,000 jobs - The Labor Department reported that U.S. Employers added 271,000 non-farm jobs in October.  Itwas the most robust job growth in 10 months which caught experts by surprise after 2 months of disappointing job growth, and a weak third quarter GDP growth figure released just last week. Experts expectations were 150,000 jobs so 271,000 blew analysts away. The unemployment rate fell to 5%, its lowest level since April 2008. Even more positive was wage growth which has been below the targeted growth rate desired by The Fed. Average hourly wages were up 0.4% in October from September. For the last 12 months wages are up 2.5% from last October.

Stock markets rise for a 6th straight week of gains - Stocks have recovered nicely from the market's steep slides in August and September.  That slide was termed a "correction" which is defined as a drop of 10% or more. The sharp rebound was fueled by strong 3rd quarter corporate earnings by U.S. Companies which beat expectations and positive signs in Europe and Asia.  Those included economic stimulus to boost their economies like the measures we took during the recession. The  Dow Jones Industrial Average closed the week at 17,910.33, up from last week's close of 17,663.54.  The S&P 500 closed the week at 2,099.20, up from last Friday's close of 2,079.36.  The NASDAQ closed the week at 5,147.12,  up from last week's close of 5,053.75.

Treasury bonds yields rise after job report shows robust growth - A very strong jobs report showing that the economy added 271,000 jobs, almost double what analysts expected, caused investors to fear that The Federal Reserve would raise interest rates at the December policy meeting.  It will be the first rate increase since 2006 if The Fed follows through. Even if they do raise rates experts believe that they won't go too high or rise very quickly. Rates on bonds and mortgages rose after the jobs figures were announced. The10 year Treasury bond yield closed the week at 2.34%, up from 2.16%last Friday. The 30 year treasury bond yield closed Friday at 3.09%, up from last week's close of 2.96%.

Mortgage rates inch up slightly this week -   The 30 year fixed rates are around 4.00% for loans up to $417,000, and around 4.25% for loans over $417,000.  The 15 year fixed rate loans are about 3.375% for loans up to $417,000, higher loan amounts have rates that are around 3.5%. 5-Year ARM and 3–Year ARM rates are both around 3.125%.

Economic update for the week ending October 30, 2015

Stocks have best month in 4 years- The stock markets closed the month with the DOW and S&P up more than 9% in October.  After dropping about 10% in August and September, October's rally came as a welcome relief to investors. The Dow Jones Industrial Average closed the week at 17,663.54, up slightly from last week's close of 17,646.70.  The S&P 500 closed the week at 2,079.36, almost unchanged from last Friday's close of 2,075.15.  The NASDAQ closed the week at 5,053.75, also about the same as last week's close of 5,031.86.

Third quarter GDP rises at a disappointing 1.5% annual rate - The U.S. economy cooled in the July to September quarter to rise at an annual rate of just 1.5%.  This followed an annualized rise of 3.9% in the second quarter, and was well below experts expectations. Much of this drop in production stemmed from the largest drawdown in inventories in three years as companies cut back on producing products, especially those for overseas markets.  This drag on production was caused mostly by a cut in inventory levels, and it is thought to be temporary by experts. They expect GDP will pick up in the fourth quarter, as companies now feel they are no longer at overstocked inventory levels. Although, even if GDP picks up in the final quarter, the disappointing  third quarter all but assures that theeconomy will fail to break the 3% growth level for the 10th straight year, according to experts.

Consumer spending increases in third quarter - With the GDP slowing in the third quarter due mostly to businesses showing more caution, consumers continued to spend at a steady pace, as consumer spending rose at an annual pace of 3.2%. Consumers were more confident than at any time since the end of the recession in 2009 as spending for durable goods rose 6.7% in the third quarter. Durable goods are long lasting goods such as cars, trucks, and equipment. Experts feel that consumer spending will continue to be strong in the final quarter of 2015 and will push the GDP numbers back up above the 2% level.

Pending home sales slightly lower in September - The California Association of Realtorsannounced that the pending home sales index decreased 1.5% in September from August.  This is seasonal and was much better than the average decline of 3.4% that we have seen from August to September over last seven years. Southern California showed the largest drop in pending sales. Contracts in Southern California were down 8.9% in September from August, but up 10.2% from last September.

Fed leaves interest rates unchanged at October policy meeting - Federal Reserve Chairperson Janet Yellen announced that The Fed elected to leave its benchmark rates at near zero levels at the conclusion of their 2- day meeting on Wednesday. She did say they the Fed was open to raising rates at their December meeting as they still believe that the fundamentals of the economy point to moderate growth. It was definitely a mixed message, which experts are used to from the Fed. It is widely believed that the Fed was cautious after lower than expected job creation over the last two months, but if job growth picks back up the Fed will go ahead with the first rate increase since 2006. Nevertheless, the Fed's optimism did drive bond yields up slightly.

Treasury bonds yields rise following Fed's statement - The 10 year Treasury bond yield closed the week at 2.16%, up from 2.09%last Friday. The 30 year treasury bond yield closed Friday at 2.96%, up from last week's close of 2.90%.

Mortgage rates inch up slightly this week -   The 30 year fixed rates are around 3.875% for loans up to $417,000, and around 4.00% for loans over $417,000.  The 15 year fixed rate loans are about 3.20% for loans up to $417,000, higher loan amounts have rates that are around 3.375%. 5-Year ARM and 3–Year ARM rates are both around 3.00%.

Economic update for the week ending October 17, 2015

Stocks have third straight week of gains - Stocks ended the week higher despite some less than positive economic news.  The Federal Reservereported that manufacturing production declined for a second straight month. The Consumer Price Index dropped 0.2% in September and the past 12 months there has been zero inflation, according to the government. This is well below the Fed's 2% target.  The good news for the week was that experts feel with job growth slowing, manufacturing slowing, and no inflation, The Federal Reserve will not raise interest rates this year.Consumer Confidence also increased from where it was in September,according to The University of Michigan survey.  Stocks rose and interest rates dropped this week.  The Dow Jones Industrial Average closed the week at 17,215.97, up from last week's close of 17,048.49. The S&P 500 closed the week at  2,033.13,  up from last Friday's close of 2,014.89.  The NASDAQ closed the week at 4,886.69, up from last week's close of 4,830.47.

Treasury bonds yields drop this week - The 10 year Treasury bond yield closed the week at 2.04%, down from 2.12% last Friday.  The 30 year treasury bond yield closed Friday at 2.87%, down from last week's close of 2.94%. 

Mortgage rates at lows of the year –  The 30 year fixed rates are around 3.75% for loans up to $417,000, and around 4.00%  for loans over $417,000.  The 15 year fixed rate loans are about 3.20% for loans up to $417,000, higher loan amounts have rates that are around 3.375%. 5-Year ARM and 3–Year ARM rates are both around 3.00%.

Existing home sales and prices lower in September than August, but higher than last September - The California Association of Realtors reported that the number of home sales in September were down 1.5% from August, but still up 6.9% from September 2014. This is mostly seasonal. It's not uncommon for sales to taper down after the summer. The state-wide median price paid for a home in September was 482,150 down 2.3% from August, but up 4.3% from September 2014. We are definitely seeing prices softening in our markets at all price points. The unsold inventory index was unchanged at a 3.7 month supply. A normal market has a 6-7 month supply. It's unusual to see prices stabilize or even soften with such low inventory levels.  It will be interesting to see what the future brings!

California unemployment rate drops to 5.9% - The Employment Development Department reported that California's unemployment rate dropped from 6.1% in August to 5.9% in September, its lowest rate since November 2007. This was despite California adding just 8,200 jobs in September following adding 42,000 jobs in August. 

Economic Update for the month ending September 2015 and update for the week ending October 3, 2015

September month end - Stocks stabilize in September after dropping sharply in August – Although the economy showed the pace of growth slowing in September the stock markets stabilized, after dropping sharply in August on fears of weakness in China, the world’s second largest economy. The Dow Jones Industrial Average closed the month at 16,284.70, down  from 16,528.03 on August 31.   The S&P 500 closed the month at 1,920.03, down from 1,972.18 at the end of August. The NASDAQ closed the month of September at 4,620.17, down from 4,776.51 on August 31.

For the week ending October 3, 2015 –On Friday October 2 the September jobs report was released. It showed that the economy gained far fewer jobs in September than experts expected. Although this report was very disappointing the one thing it did was calm investors’ fears of how soon and how much the Federal Reserve would rise interest rates. Rates dropped on bonds and mortgages and stocks rose on Friday after the report was released. The Dow Jones Industrial Average closed the week at16,472.37, up from last week's close of 16,314.67. The S&P 500 closed the week at  1,951.36, up from last Friday's close of 1,931.34. The NASDAQ closed the week at 4,707.78, up from last week's close of 4,686.50. 

September 30 Month end -Treasury Bond yields drop in September – The 10 year Treasury bond yield closed the month at 2.06%, down from August’s close of 2.21%.  The 30 year treasury bond yield closed on September 30, at 2.87%, down from August’s close of 2.95%.

For the week ending October 3, 2015 - Treasury Bond yields much lower this week following weak jobs report – The 10 year Treasury bond yield closed week at 1.99%, down from 2.17% last Friday.  The 30 year treasury bond yield closed Friday at 2.82%, down from last week's close of 2.96%. 

Mortgage Rates fall in September – Rates for October 2, 2015 –  The 30 year fixed rates are around 3.75% for loans up to $417,000, and around 3.875% for loans over $417,000.  The 15 year fixed rate loans are about 3.00% for loans up to $417,000, higher loan amounts have rates that are around 3.25%. 5 Year-ARM and 3–Year ARM rate are both around 3.00%.

U.S. Employers add 142,000 jobs in September  – unemployment rate unchanged at 5.1% - The Labor Department reported that US employers added 142,000 non-farm new jobs in September.  The unemployment rate remained at 5.1%, its lowest level since  2008. It was a disappointing report as 203,000 new jobs were expected by experts. This was the second straight month that job growth fell well below expectations, as August was revised down to 136,000 jobs added from 172,000. Many experts feel that the Fed’s decision not to raise interest rates is better understood as the last two months have been the weakest in several years.  Average hourly wages also fell for the first time this year after looking in July and August that wage growth was beginning to tick up. Wage growth is well below the Fed’s target rate for healthy growth. This was a bad report in every way, except for interest rates which dropped to the lowest levels of the year. The report shows that falling oil prices, a strong dollar, weakness in China and Europe are beginning to cause slowing in the U.S.. The energy sector lost 12,000 net new jobs in September, after losing 9,000 in August, bringing the total loss of energy sector jobs to 100,000 so far this year, as a result of falling oil prices.  Weakness in China, and the strong dollar has caused exports to fall. Exports were down over 5% for the year ending July and are forecasted to be down nearly 10% in August from a year ago.  This has caused manufacturing to shed 9,000 jobs in September, after losing 18,000 jobs in August. Experts feel that this report will surely give The Fed something to think about when they decide whether or not to raise their benchmark rates from near 0% where they have been since 2008 in an attempt to stimulate the economy.

California employers add 36,200 non-farm jobs - The state's unemployment rate dropped to 6.1% in August from 6.2% in July. Unemployment is at its lowest level since January 2008 in California according to the Bureau of Labor Statistics. Since August of 2014 the state has gained 470,000 jobs. That represents an annual growth rate of 3% which has outpaced the national average of 2.1% for the 50 states. 

Consumer confidence reading edges up in September- The University of Michigan final reading on consumer sentiment for September moved higher. It ended the month at a reading of 87.2 from an initial reading of 85.7 at the beginning of the month. The average reading since its inception has been 85.3. The average reading during the 5 recessions since its inception has been 69.3. During non-recessionary years the average reading has been 87.5, which is right about where we are. Consumer sentiment is important because consumer confidence is so closely tied to consumer spending which accounts for nearly a third of the economy.

Second quarter GDP revised upward - The Commerce Department said Friday that the second quarter gross domestic product showed a growth rate of 3.9%. This was higher than their initial estimate of 3.7%. The Commerce Department also said Friday that consumer spending rose 3.6% during the quarter up from an initial estimate of 3.1%.

Important gages of inflation show no threat of inflation  - The Labor Department said that its Producer Price Index was unchanged in August after gaining 0.2% in July. In the past 12 months ending in August the Producer Price Index has shown producer prices declining 0.8%, the 7th straight past 12 month decrease in the index. This is mostly attributed to lower energy costs due to falling oil prices, and low import costs due to a stronger dollar. It should be noted that while producers of goods and services are seeing prices actually fall. The Consumer Price Index also declined 0.1% August after increasing 0.1% in July, according to the Labor Department. Falling prices, also called deflation is also something that is a sign of slowing in the economy. The Fed’s target rate for inflation is 2%. So far this year we have been well below that.

Pending home sales decline in August, but numbers are still above last year's levels - The California Association of Realtors reported that pending home sales fall 8.7% in August from July. While monthly pending home sales were down, year over year pending home sales in August were still up 12.8% from August 2014.  It was the 10th straight month of year over year increases in the number of pending sales, and the 7th straight month of double-digit year-to-year gains. 

California existing home sales and prices beginning to level - The California Association of Realtors reported that the number of homes sold in August dropped 3.8% on an annualized level from the number of homes sold in July. Sales were still up 9.3% from the annualized number of homes sold last August. This year the number of sales have been much higher than last year which was the lowest number of sales in decades, but those increases did moderate in August. Prices are beginning to level as well, according to The California Association of Realtors. The statewide median price in August was up 1% from July, and up only 2.5% from August 2014. That marks the lowest year over year price increase in 3 1/2 years. Unsold inventory ticked up to a 3.6 month supply from a 3.3 month supply in July. This is still a very low number. A normal market has a 6-7 month supply. It's unusual to see prices stabilize with such a low number of homes on the market. The assumption is that prices have risen to a level that buyers have pulled back on their home purchases. Either inventory can rise quickly or prices can begin to rise more quickly in this environment. Unfortunately, we won't know for sure until one or the other happens!

Economic update for the week ending September 19, 2015

Economic update for the week ending September 19, 2015

Stocks drop after Fed leaves rates unchanged - Stocks were up this week until the Federal Reserve left rates unchanged. Many investors feared a rate increase because higher rates increase borrowing costs which cut into profits. It has been widely felt that the Federal Reserve would have begun rising rates because the economy was on solid footing. Stocks had dropped over the past couple of months partially on fears on a rate increase; however, stocks dropped further when the Fed announced they were not going to increase rates! The Fed's statement made investors feel the economy was weaker than the data indicates, fearing that future growth may not materialize as expected. The Dow Jones Industrial Average closed the week at 16,384.79, down from last week's close of 16,433.09  The S&P 500 closed the week at  1,958.03, almost unchanged from last Friday's close of 1,961.05. The NASDAQ closed the week at 4,827.23, also just about the same as last week's close of 4,822.34.

Federal Reserve leaves rates unchanged - The Fed chose to leave rates unchanged. In one sense this was good news for investors that had expected the first rate increase since 2006. However, this decision, and their statement spooked investors. The Fed's statement included that The U.S. was currently the worlds strongest economy, but the risk to future growth in the economy is very high due to weakness throughout the world. It further ran through a bunch of data that showed why they are concerned. Some included: a drop in exports, inflation well below the 2% target range, a stabilizing housing market, and stagnant wages. Strong employment growth was cited as a positive. They left room to raise rates as soon as the next meeting, but added that with inflation so low that even if they did begin to raise rates they would keep rates lower than "normal levels" for a prolonged period of time due to low inflation which they said could persist for as long as a decade. Many experts took these statements to mean that the economy was not as strong as they thought. Stocks sold off on Thursday and Friday after the report was digested on fears that The Fed fears the economy may weaken.  This would affect sales which would affect future corporate profits. All in all, the one thing that investors agreed upon is that the Fed's decision not to raise rates, which have been at near zero since 2008 to stimulate the economy, creates an environment of uncertainty. Markets fear uncertainty.

Mortgage just under 4%  –  The 30 year fixed rates ended the week around 3.875% for loans up to $417,000, and around 4.00% for loans over $417,000.  The 15 year fixed rate loans are about 3.25% for loans up to $417,000, and around 3.375% for loans over $417,000. The 5 Year-ARM rate is around 2.75% and 1 Year-ARM mortgages are about 2.50%. 

Treasury Bond yields slightly lower this week – The 10 year Treasury bond yield closed week at 2.13%, down from 2.20% last Friday.  The 30 year treasury bond yield closed Friday at 2.93%, almost unchanged from last week's close of 2.95%. Mortgage rates follow bond yields so these are closely watched.

California employers add 36,200 non-farm jobs - The state's unemployment rate dropped to 6.1% in August from 6.2% in July. Unemployment is at its lowest level since January 2008 in California according to the Bureau of Labor Statistics. Since August of 2014 the state has gained 470,000 jobs. That represents an annual growth rate of 3% which has outpaced the national average of 2.1% for the 50 states. 

California existing home sales and prices beginning to level - The California Association of Realtorsreported that the number of homes sold in August dropped 3.8% on an annualized level from the number of homes sold in July. Sales were still up 9.3% from the annualized number of homes sold last August. This year the number of sales have been much higher than last year which was the lowest number of sales in decades, but those increases did moderate in August. Prices are beginning to level as well, according to The California Association of Realtors. The statewide median price in August was up 1% from July, and up only 2.5% from August 2014. That marks the lowest year over year price increase in 3 1/2 years.Unsold inventory ticked up to a 3.6 month supply from a 3.3 month supply in July. This is still a very low number. A normal market has a 6-7 month supply. It's unusual to see prices stabilize with such a low number of homes on the market. The assumption is that prices have risen to a level that buyers have pulled back on their home purchases. Either inventory can rise quickly or prices can begin to rise more quickly in this environment. Unfortunately, we won't know for sure until one or the other happens!

Economic update for the week ending September 5, 2015

Economic update for the week ending September 5, 2015

Economy adds 173,000 net new jobs in August- The Labor Department Reported that the economy added 173,000 new non-farm jobs in August.  This was below the 220,000 jobs expected. Theunemployment fell to 5.1%, its lowest level in 7 years. That is down from 5.3% last month and has dropped nearly in half since peaking during the recession.  The most positive part of the report was that wages, that have been stagnant, rose 8 cents an hour in August following a 6 cent an hour rise in average wages in July. This was welcome news after June's number showed that the April, May, June quarter had the lowest wage growth in over 30 years. August's figure shows wage growth of 2.2% over the last 12 months, which is well over the inflation rate.

Stocks down again this week - Fears of China's slowdown and a possible interest rate hike by the Fed spooked the markets. More bad economic data from China showed their economy slipping further. At the same time U.S. G.D.P. rose 3.7%, which was better than expected. The August jobs number showed fewer new jobs than expected, yet the unemployment rate fell to near pre-recession levels, and wages, which have been stagnant, rose more than expected. Auto sales were strong, another sign that U.S. consumers are spending money. The Federal Reserve Beige Book, the Fed's assessment of the strength of the economy, showed that they felt that the economy was growing at a "modest to moderate pace" and that the Chinese slowdown is havering a "only a moderate affect on  the U.S. economy." This again got investors fearing an interest rate hike by the Fed. Some fear that the first rate hike since 2006 could happen as soon as it's September 16th - 17thmeeting. This was also a drag on stocks. The Dow Jones Industrial Average closed the week at16,102.38, down from last week's close of 16,643.01. The S&P 500 closed the week at  1,921.22, down from last Friday's close of 1,988.87.  The NASDAQ closed the week at 4,683.92, down from last week's close of 4,828.33.

Mortgage rates remain near lows for the year   –  The 30 year fixed rates ended the week around 3.875% for loans up to $417,000, and around 4.00% for loans over $417,000.  The 15 year fixed rate loans are about 3.25% for loans up to $417,000, higher loan amounts have rates that are around 3.375%. The 5 Year-ARM rate is around 2.75% and 1 Year-ARM mortgages are about 2.50%. 

Treasury Bond yields rose from lows early in the week and closed higher than last week – Investors bought stocks and pulled money from the safety of U.S Treasury Bonds pushing yields up from Monday's lowest point in over a year. The 10 year Treasury bond yield closed week at 2.13%, almost unchanged from 2.19% last Friday.  The 5 year was under 2% at one point on Monday. The 30 year treasury bond yield closed Friday at 2.89%, down slightly from last week's close of 2.92%. 

U.S. Bank's earnings rise - The FDIC reported that profits from U.S. Banks rose 7.3% in the second quarter of 2015. The number of "problem banks" continued to fall. Only 5.6% of all banks were not profitable. This was by far the most healthy banks have been since the financial crisis which began in 2007.

Factory orders higher - Orders from U.S. Factories posted a modest gain in July according to TheCommerce Department. Factory orders were up 0.4% in July. This was not as good as June's 2.2% increase, but it did build on that increase.

Economic update for the week ending August 29, 2015

Economic update for the week ending August 29, 2015

Stocks finish week up slightly from last week's close - It was another wild week for the stock markets - Monday was like a "perfect storm" first the Chinese markets sold off in what looked like a crash, dropping 8 1/2% overnight, oil dropped to $38 a barrel, and the dollar strengthened further. This resulting in a drop in the DOW of 1,000 points at one point Monday before recovering slightly and closing about 600 points down for the day. This was after dropping about 1,000 points the previous week!  Tuesday it looked like the markets were recovering as the DOW was up over 300 points an hour before the close, only to sell off and close down about 300 points. Fortunately, Wednesday and Thursday the DOW gained over 1,000 points as oil prices rose back up to about $40 a barrel, the dollar softened, China's markets stabilized, and an above expected GDP report was released showing that the U.S. Economy was had gained momentum and was growing faster than expected. The Dow Jones Industrial Average closed the week at 16,643.01, up from last week's close of 16,456.75.  The S&P 500 closed the week at  1,988.87, also about the same as last Friday's close of 1,970.89.   The NASDAQ closed the week at 4,828.33, up from last week's close of 4,706.04.

Mortgage rates rise slightly from Monday's lows  –  The 30 year fixed rates ended the week around 3.875% for loans up to $417,000, and around 4.00% for loans over $417,000.  The 15 year fixed rate loans are about 3.25% for loans up to $417,000, higher loan amounts have rates that are around 3.375%. The 5 Year-ARM rate is around 2.75% and 1 Year-ARM mortgages are under 2.50%. At one point the fixed rate hit 3.625% during Monday's stock sell off.

Treasury Bond yields rose from lows early in the week and closed higher than last week – Investors bought stocks and pulled money from the safety of U.S Treasury Bonds pushing yields up from Monday's lowest point in over a year. The 10 year Treasury bond yield closed week at 2.19%, up from 2.05%. last Friday.  The 5 year was under 2% at one point on Monday. The 30 year treasury bond yield closed Friday at 2.92%, up from last week's close of 2.74%. 

U.S. Economy expanded at 3.7% annual rate in the second quarter - The Commerce Department reported Thursday that the GDP (gross domestic product), the broadest measure of goods and services in the economy, grew at an annual rate of 3.7% in April, May and June.  This eclipsed the estimated 2.3% growth rate that was expected. It was welcome news that the economy was expanding with more momentum than expected in light of a massive sell off in the stock market in which the DOW lost over 1600 points in 6 sessions.  Partially due to this report it gained back about 1,000 points Wednesday and Thursday. Unfortunately, after this report mortgage rates rose about 1/8% across the board, as it does increase the likelihood that The Federal Reserve will follow through on its first interest rate rise since 2006, which they have indicated would happen later this year. 

Inflation eases in July - The Labor Department reported that The Consumer Price Index rose 0.1% in July. This followed increases of 0.3% in June and 0.4% in May. This showed that inflation pressures are very moderate. The core inflation rate, which excludes food and energy, grew at just 0.1% in July after a 0.2% June gain.  This is how The Fed measures prices as measured by the personal consumption expenditure, what ever that means! It is the Fed's prefered way of measuring core inflation.  The Fed's core inflation rate measurement is at 1.2% over the past 12 months, which is well below its target of 2%.Usually, the Fed would raise or lower rates to control inflation. With the Fed's benchmark rate near zero, an unprecedented level since 2008 it is likely, according to them, that they will raise their discount and funds rates even though inflation is below where they want it. Experts feel that a 0.1% inflation gain in July is so low that the Fed may hold off on an increase, as deflation is as dangerous to the economy as inflation.

Consumer sentiment falls in August - The University of Michigan's final August reading of consumer sentiment fell to its lowest level since May last week. The survey was done while the stock market had dropped 1600 points over 6 sessions and before it made up 1,000 points Wednesday and Thursday, and before the positive quarter 2 GDP results were released. Expect September's readings to be higher!

S&P / Case Schiller says home prices continuing to rise - U. S. Home prices continued to rise in June according to The S&P / Case Schiller Home Price Index.  It's 20 city index rose 5% year over year in June. Case  Schiller computes home prices in 20 major cities with a different formula which is more reflective, according to them,  of the actual prices than the median price used by others, as prices in major cities exceed the median price levels.

Economic update for the month ending July 31, 2015

Economic update for the month ending July 31, 2015

Stocks up slightly for the month, even after dropping in almost every session over the last two weeks – Stocks rose early in the month following a third Greek bailout, which kept Greece from leaving the Euro. First quarter U.S. corporate profits were strong in just about all sectors, except energy companies due to a drop in oil prices, and companies with a lot of exposure to China. The Chinese stock markets dropped aver 30% before stabilizing, averting a near collapse.  On the last week of the month The Labor Department reported that wage growth had stalled to the lowest growth level in 33 years. Stocks were quite volatile this month.

The Dow Jones Industrial Average closed the month at 17,689.96, up slightly from 17,596.35 on June 30.   The S&P 500 closed the month at 2,103.84, up from 2057.64 at the end of June. The NASDAQ closed the month of July at 5,128.28, up from 4,958.57on June 30.

Treasury Bond yields lower in July – The 10 year Treasury bond yield closed the month at 2.18%, down from June’s close of 2.35%, The 30 year treasury bondyield closed July 31 at 2.91% , down from June’s close of 3.11%.  Weak wage growth, tame inflation, fears of a strong dollar, dropping oil prices, mixed profit reports, and trouble in the Chinese economy, caused investors to buy bonds in a flight for safety. This lowered rates on mortgages as well as home mortgage rates follow the treasury bond rates.

Mortgage Rates drop in July  –  The 30 year fixed rates ended the month around 3.875% for loans up to $417,000, and around 4.00% for loans over $417,000.  The 15 year fixed rate loans are about 3.125% for loans up to $417,000, higher loan amounts have rates that are around 3.375%. 5 Year-ARM rate is around3.00% and 1 Year-ARM mortgages are around 2.50%.

U.S. Employers add 223,000 jobs in June  – unemployment rate drops to 5.3% - The Labor Department reported that US employers added 223,000 non-farm new jobs in June.  The unemployment rate fell to 5.3%, its lowest level since April 2008. This was good news which showed that the economy is continuing to gain strength. The negative part of the report was that wage gains, which seemed to be picking up in April and May, were disappointing in June. Wages were up just 2% for the year which is well below the Federal Reserve’s target of 3.5%.

Wage and benefit growth at lowest level in 33 years – The Labor Department reported that the employment cost index increased only 0.2% in the second quarter of 2015. This was the slowest pace of wage growthsince 1982. This was  a disappointment to experts considering that around 3 million jobs have been added in the last 12 months, a near record level of job growth. Unfortunately wages have remained stagnant.

California adds 22,900 jobs in June –  TheEmployment Development Department reported that employers added 22,900 non-farm jobs in June. California’s unemployment rate dropped to 6.3% in June from 6.4% in May. The unemployment rate was 7.5% last June. Although the state’s unemployment rate was 4.8% before the recession in 2006, California, the world’s eighth largest economy’s job growth has expanded 13.5% since the recession ended.  U.S. job growth rose 9.4% since the end of the recession. The national unemployment rate is currently 5.3%. Unfortunately, California lost a higher percentage of jobs than the nation during the recession, but the state is on the right track adding jobs at a higher rate than the nation as a whole.

Home prices continue to rise –  Core Logic reported that the median price of a single family home in California rose 3% in June to $417,000. This represents a 7% rise in the median price from last June. The median price is the point at which ½ the homes sell for more and ½ the homes sell for less. It’s really not an indication of any particular home or neighborhood, but it is the only official measure of home price comparisons. It is a good indication of trends. We have seen the higher priced markets have stronger price gains, so our markets have prices rising at a greater rate than markets at the price level of the median price.  The California Association of Realtors reported that ( average price, a measurement that is not commonly used) home values were up 2.2% in June from May and 10.1% from June 2014. The average price in California was $634,190, according to the CAR. 

California pending existing home sales continue to increase -  The California Association of Realtors reported that June pending home sales were up 12.5% on an annual basis from June 2014. This marked the 7th straight month of increased sales numbers and the 5th straight month of double-digit  gains. Month over month California as a whole saw fewer sales in June than in May, but Southern California pending home sales were up 4% in June from May.  

U.S. Resale home sales jump - The National Association of Realtors reported that the number home sales of existing homes jumped in June to an 8 year high. 

U.S. New home sales surprising disappointing  - The Commerce Department reported that new home sales unexpectedly fell in June. New U.S. Single family home sales fell in June to a 7 month low. New home sales account for just 8% of  housing sales and tend to be volatile on a month to month basis. Nevertheless, June single family new home sales dropped 6.8% in June on a seasonally adjusted basis. This was disappointing, as single family new homes had been trending up sharply, but single family new home sales are still up 18.1% from June of 2014. Data showed that new building permits jumped in June to an eight year peak. This is sign that new home sales will continue to increase as limited supply was factor in inhibiting sales in June. 

The number of existing home sales continue to gain strength – Core Logicreported that same month, year over year  home sales rose in June for the 4th straight month. Statewide an estimated 46,095 resale homes changed hands which represents anincrease of 10.8%  from the number of homes sold in May and a 16.8% increase from June 2014. This rise in sales was despite  a tight supply of inventory. TheCalifornia Association of Realtors reported that home inventory levels had dropped to a 3.7 month supply in June from a 4 month supply in May. A 7 month supply is considered a normal market. Homes are hitting the market in higher numbers than a year ago, but many are selling quickly, which has not allowed the unsold numbers to increasee state is on the right track adding jobs at a higher rate than the nation as a whole.

Housing starts continue to rise –  TheCommerce Department reported that housing starts in June rose 9.8%. they also reported a surge in multifamily construction which was up 28.6 %. This accounted for the majority of the 9.8% overall rise in housing starts

Economic update for the week ending July 18, 2015

Economic update for the week ending July 18,  2015

Stocks rise after Greek default ends in a deal and second quarter U.S. corporate profits are released – Nasdaq at record high  – A deal was reached which will keep Greece in the Euro Zone. Greece agreed to raise taxes and the retirement age in exchange for more loans from the European Union, ending the crisis for now. Second quarter profits from U.S. Companies were released, showing that profits were higher than expected. This was just another sign that the economy is continuing to grow.The Dow Jones Industrial Average closed the week at 18,086.45, well above last week's close of 17,760.41.  The S&P 500 closed the week at 2,126.64, up from last week's close of 2,076.62. The Nasdaq closed Friday at 5,210.14, an all-time high, up from last week's close of 4,997.70.

Treasury Bond yields drop a little this week -   Fed Chairperson, Jennet Yellentestified in front of congress this week. Her remarks included that, while she was going to raise the benchmark Discount Rate from the near 0% it has been since 2008 later this year, that any rise would be slight, and that further raises would be very moderate. Canada also lowered their benchmark rate as the country has slipped into a recession. Yellen’s testimony and Canada’s move seemed to calm investors’ fears of the first fed rate hike since 2006, which caused bond rates to drop. The 10 year Treasury bond yield closed the week at 2.34%, down from last week's  2.42%. The 30 year treasury bond yield closed Friday at 3.08%,  down from 3.20% last week.

Mortgage rates unchanged this week –   The 30 year fixed rates ended the week around 4.10% for loans up to $417,000, and around 4.25% for loans over $417,000.  The 15 year fixed rate loans are about 3.375% for loans up to $417,000, higher loan amounts have rates that are around 3.50%. 5 Year-ARM rate is around 3.00% and 1 Year-ARM mortgages are around 2.75%.

California adds 22,900 jobs in June –  TheEmployment Development Department reported that employers added 22,900 non-farm jobs in June. California’s unemployment rate dropped to 6.3% in June from 6.4% in May. The unemployment rate was 7.5% last June. Although the state’s unemployment rate was 4.8% before the recession in 2006, California, the world’s eighth largest economy’s job growth has expanded 13.5% since the recession ended.  U.S. job growth rose 9.4% since the end of the recession. The national unemployment rate is currently 5.3%. Unfortunately, California lost a higher percentage of jobs than the nation during the recession, but the state is on the right track adding jobs at a higher rate than the nation as a whole.

Housing starts continue to rise –  The Commerce Department reported that housing starts in June rose 9.8%. they also reported a surge in multifamily construction which was up 28.6 %. This accounted for the majority of the 9.8% overall rise in housing starts.

Home prices continue to rise –  Core Logic reported that the median price of a single family home in California rose 3% in June to $417,000. This represents a 7% rise in the median price from last June. The median price is the point at which ½ the homes sell for more and ½ the homes sell for less. It’s really not an indication of any particular home or neighborhood, but it is the only official measure of home price comparisons. It is a good indication of trends. We have seen the higher priced markets have stronger price gains, so our markets have prices rising at a greater rate than markets at the price level of the median price.  The California Association of Realtors reported that ( average price, a measurement that is not commonly used) home values were up 2.2% in June from May and 10.1% from June 2014. The average price in California was $634,190, according to the CAR. 

The number of existing home sales continue to gain strength – Core Logicreported that same month, year over year  home sales rose in June for the 4th straight month. Statewide an estimated 46,095 resale homes changed hands which represents anincrease of 10.8%  from the number of homes sold in May and a 16.8% increase from June 2014. This rise in sales was despite  a tight supply of inventory. TheCalifornia Association of Realtors reported that home inventory levels had dropped to a 3.7 month supply in June from a 4 month supply in May. A 7 month supply is considered a normal market. Homes are hitting the market in higher numbers than a year ago, but many are selling quickly, which has not allowed the unsold numbers to increase.

Economic update for the week ending June 18, 2015

Economic update for the week ending June 18, 2015

Stocks have good week with Nasdaq breaking into all time highs- Stocks soared after the Federal Reserve announced that they were not going to raise their benchmark rate this session. They further states that even though we were nearing "full employment" there were some signs of slowing in the economy, and that the economy is growing modestly. If the last sentence makes no sense, welcome to FedSpeak! More failed talks to extend Greece's debt crises. Greece on the verge of bankruptcy and leaving the Euro.  Friday the European Central Bank provided emergency funding to cover a run on Greek Banks. This weighed on stocks.  TheDow Jones Industrial Average closed the week at 18,015.95, up from 17,898.84 last week. The Nasdaq closed at 5,117.00, up from 5,051.10 last Friday. The Nasdaq hit highs of 5137 this week, finally surpassing the previous record of 5132 set in 2000 during the .Com bubble.  The S&P 500 closed at 2,109.99, up slightly from 2,094.11 last Friday.

Bond yields drop following Fed announcement  -   After weeks of rising rates it was nice to see a second week of rates settling. While they are still about 1/4% higher than 6 weeks ago they are about 1/4% lower than the highs for the year set just a couple weeks ago.  The 10 year U.S. Treasury Bond closed the week at a 2.26% yield, down from  2.39% last week.  The 30 year U.S. Treasury Bond closed Friday yielding 3.05%,down from 3.10% last Friday.  

Mortgage Rates slightly lower than last week–  The 30 year fixed rate ended the week around 4.125% for loans up to $417,000, around 4.325% for loans between $417,000 and $625,500, and 4.375% for loans over over $625,500. The 15 year fixed rate loans are about 3.25% for loans up to $417,000, around 3.375% for loans between $417,000 and $625,500, and around 3.50% for loans over $625,500. The 5 Year-ARM rates are around3.10% 1 Year-ARM mortgages are around 2.60%.

Resale home sale pace continues to exceed last year - The California Association of Realtorsreported that statewide home sales of existing single-family homes totaled 423,360 in May on a seasonally adjusted annualized rate. That wasdown 1.1% from April, but up 8.9% from May 2014. It was the second straight month that statewide sales were above the 400,000 annualized mark. Last year we saw sales below the 400,000 sales mark, which was about 14% below the rate of an average year since 1988. This year we are still below average sales rates, but much closer than last year. Low inventory is one factor that is keeping sales numbers down. CAR reported that there is just a3.5 month supply of homeson the market. A 6 to 7 month supply is a normal market. 

Home prices continue to rise - The California Association of Realtorsreported that the median price paid for a resale home in California increased 0.8% from April and 4.4% from May 2014. While price gains are moderating from double digit gains seen in 2012, 2013, and the beginning of 2014, they are still increasing. CAR also released more local statics. Los Angeles County had prices up 1.3% from April and 5.1% from last May.Ventura County had prices up 3.7% from April and 8.2% from last May. Orange County had prices up 1.8% from April and just 2.8% from last May.