Economic update for the week ending May 19, 2018:
California existing home sales and prices increase in April - The California Association of Realtors reported that total existing home sales totaled 416,790 in April, on a seasonally adjusted annualized rate, that was 2.2% higher than last April's sales rate. Prices continued to increase. Statewide the median price paid for a home was $584,460, up 8.6% from April 2107. Local markets posted varying gains. In Los Angeles County, the median price paid for a home was up 10.1% from last April. The median price in Ventura County increased just 4.7% year over year. The Orange County median price gained 5.5%. Inventory levels rose 1.9%in April marking the first rise in three years. The unsold inventory index in April had a 3.2 month supply of homes, up from a 2.9 month supply in March, but still lower than a 3.3 month supply in April 2017.
Stocks lower for the week - Higher interest rates and renewed trade talks put pressure on stocks this week. Oil prices reached a three year high which some believe will spark inflation levels and cause the Federal Reserve to raise rates more swiftly. At the same time the dollar straightening to a 5 month high. That makes imports less expensive and lowers inflationary pressure. We will have to wait and see. Experts are mixed on whether bond rates have topped out for the year. The 10 year treasury bond yield topped 3% this week, and hit 3.11% at one point before dropping back. Higher interest rates increase corporate borrowing costs, which lowers profits. The Dow Jones Industrial Average closed the week at 24,715.09, down from last week’s close of 24,831.17. It is unchanged year to date. The S&P 500 closed the week at 2,712.97, down from 2,727.72 last week. It's up 1.5% year to date. The NASDAQ closed at 7,354.34, down from 7,402.88 last week. It is up 6.5% year to date.
Treasury Bond yields slightly lower this week - The 10 year treasury bond closed the week yielding 3.06%, up sharply from 2.94% last week.The 30-year treasury bond yield ended the week at 3.20%, up from 3.10% last week.
Mortgage Rates higher this week - The May 17, 2018 Freddie Mac Primary Mortgage Survey reported that the 30 year fixed mortgage rate average was 4.61%, up from last week’s 4.55%. The 15 year fixed was 4.08%, up from 4.01% last week. The 5-year ARM was 3.82% up from 3.77% last week.