Economic Update for the week ending December 19, 2020
Stock markets finished the week higher – Investors teetered between optimism and pessimism this week. On the positive, COVID-19 vaccine injections began in the U.S.. A second vaccine from Moderna gained unanimous approval from the FDA advisory panel and is awaiting full
FDA approval which is expected imminently. That will add millions of vaccine doses which is expected to speed up the process for more of the population to get vaccinated sooner. A $900 billion stimulus package has moved closer to approval. It’s expected to be approved over the weekend. At the same time COVID cases are spiking out of control. Many hospitals are out of beds, or nearly out of beds. States and cities are taking further action to keep people home causing businesses across the country to close. New unemployment claims rose by almost 900 thousand last week. With vaccinations a reality, and a new stimulus package in the works the stock markets had a positive week. The Dow Jones Industrial Average closed the week at 30,179.05, up 0.4% from 30,046.26 last week. It’s up 5.8% year-to-date. The S&P 500 closed the week at 3,709.41, up 1.3% from 3,663.46 last week. It is up 14.7% year-to-date. The NASDAQ closed the week at 12,755.64, up 3% from 12,377.87 last week. It’s up 32.0% year-to-date.
U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 0.95%, up from 0.90% last week. The 30-year treasury bond yield ended the week at 1.70%, up from 1.63% last week. We watch bond yields because mortgage rates often follow treasury bond yields.
Mortgage rates – The December 17, 2020, Freddie Mac Primary Mortgage Survey reported mortgage rates for the most popular loan products as follows: The 30-year fixed mortgage rate was 2.67%, down from 2.71% last week. The 15-year fixed was 2.21%, down from 2.26% last week. The 5-year ARM was 2.79%, unchanged from 2.79% last week.
The California Association of Realtors reported that existing, single-family home sales totaled 508,820 on an annualized basis in November. That represented a year over year increase of 26.3% from the number of homes sold in November 2019 when single-family home sales totaled 402,880 on an annualized basis. It was the first time that monthly home sales exceeded 500,000 units on an annualized basis in 11 years, and the most homes ever sold in November. Home sales are homes that closed escrow. Pending home sales are new contracts signed. Those are near record levels as well. The median price paid for a home in California was $699,000, up 18.5% from the median price last November. Inventory levels were lower than one year ago. There was just a 1.9-month supply of homes for sale in November, down from a 3.1-month supply one year ago. The current supply of homes was almost unchanged from September and October, as a record number of new listings were taken in November but sold quickly.
Have a great weekend!