Economic update for the week ending August 17, 2019

Stocks drop for the third straight week –Stocks declined as recession fears increased after several economic indicators point to a global slowdown. President Trump announced that tariffs scheduled to begin in September would be pushed back to at least the middle of December, which helped the markets in an otherwise turbulent week.  The Dow Jones Industrial Average closed the week at 25,886.01, down 1.5% from26,287.44 last week. It’s up 11% year to date. The S&P 500 closed the week at 2,888.68, down 1.0% from 2,918.655 last week. It is up 15.2% year to date. The NASDAQ closed the week at 7,895.99, down 0.8% from 7,959.14 last week. The NASDAQ is up 19% year to date. 

Treasury Bond Yields at lowest level in 3 years – Bond yields dropped sharply on recession fears – The 10-year treasury bond closed the week yielding 1.55%, down from 1.74% last week. The 30-year treasury bond yield ended the week at 2.01%, down from 2.26% last week. We watch treasury bond yields because mortgage rates often follow bond yields. 

Mortgage rates near record lows this week – The August 15, 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 3.60, unchanged from 3.60% last week. The 15-year fixed was 3.07%, almost unchanged from 3.05% last week. The 5-year ARM was 3.35%, unchanged from 3.36% last week. Rates dropped at the end of the week. The 30-year fixed was well under 3.5%! Next week’s survey rates should be lower.

July California existing home sales report – July marked the first month in one year where the number of sales increased year over year for the same month the previous year – The California Association of Realtors reported that existing single-family homes sales totaled 411,630 in July on a seasonally adjusted annualized rate.  That represented a jump of 5.6% from June and a year over year increase of 1.1% from last July. The number of homes sold from January to July are down 4.9% compared to the first 7 months of 2018, but it was encouraging to have a month with more sales than the same month last year. The statewide median price was $607,990, up 2.8% from July 2018. The unsold inventory index stood at a 3.2-month supply of homes for sale, down from a 3.3 month supply last July. Year over year results on a regional basis in July were as follows: In Los Angeles County the median price was $611,250, up 2.3%, and the number of sales increased 4.7%.  In Orange County the median price was $839,450, up 1.3%, and the number of sales increased 6.7%. In Ventura County the median price was $685,000, up 3.4%, and the number of sales increased 2.1%.