Economic update for the week ending September 28, 2019
Stocks lower for the week – Political upheaval dominated the headlines this week, but there was other economic news that impacted markets. A key consumer spending report revealed that consumer spending slowed in August. Inflation moderated in August falling well below the Fed’s 2% target. This relieves pressure on the Fed and allows them to continue dropping their key interest rate without the risk of inflation. The Consumer Confidence Index dropped in September, as consumers reported that they were growing nervous about the economy because of trade tensions. The Dow Jones Industrial Average closed the week at 26,820.25, down 0.4% from 26,935.07 last week. It’s up 15% year to date. The S&P 500 closed the week at 2,961.79, down 1.0% from 2,992.07 last week. It is up 18.1% year to date. The NASDAQ closed the week at 7,939.63, down 2.2% from 8,117.67 last week. The NASDAQ is up 19.7% year to date.
U.S. treasury bond yields lower for the week – The 10-year treasury bond closed the week yielding 1.69%, down from 1.74% last week. The 30-year treasury bond yield ended the week at 2.13%, down from 2.17% last week. We watch treasury bond yields because mortgage rates often follow bond yields.
Mortgage rates lower this week – The September 26, 2019 Freddie Mac Primary Mortgage Survey reported mortgage rates for the most popular loan products as follows: The 30-year fixed mortgage rate average was 3.64%, down from 3.73% last week. The 15-year fixed was 3.16%, down from 3.21% last week. The 5-year ARM was 3.38%, down from 3.49% last week.
August California existing home sales report – The California Association of Realtors reported that existing single-family homes sales totaled 406,100 in August on a seasonally adjusted annualized rate. That represented a year over year increase of 1.6% from last August. The number of homes sold year to date is down 4.1% from the first 8 months of 2018. The statewide median price was $617,410, up 3.6% from last August. The unsold inventory index stood at a 3.2-month supply of homes for sale, down from a 3.3 month supply last August. Year over year results on a regional basis were as follows: In Los Angeles County the median price was $627,690, up 3.3% from last August. The number of sales was down 1.5% from last August. In Orange County the median price was $810,000, down 3.4% from August 2018. The number of sales increased 2.1% from August 2018. In Ventura County the median price was $661,900, up 0.3% from last August. The number of sales increased 1.4% from last August.
Nationwide existing-home sales and prices increase in August- The National Association of Realtors reported that that the number of existing-home sales increased 2.6% in August from the number of sales last August. The nationwide median price paid for a home increased 4.7% in August from one year ago. That marked the 90th conservative month of year over year increases in the median price. Pending home sales also grew 1.6% in August, a signal that September existing-home sales figures will be strong.
Near historic low mortgage interest rates increased home buyer confidence in third quarter – The National Association of Realtors reported that lower interest rates boosted consumer optimism in the real estate market. The survey completed September 23 revealed that 63% of consumers surveyed felt it was a good time to buy a home.
Have a great weekend!