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.