Economic update for the week ending June 20, 2020

Stock markets higher on retail sales rebound – Stocks soared Monday after The Commerce Department reported that retail sales rose 18% in May. It was the largest monthly increase ever, and investors read the report as a sign that the economy was rebounding quicker than expected. The Dow Jones Industrial Average closed the week at 25,871.46, up 1% from 25,605.54 last week. It’s down 9.3% year to date. The S&P 500 closed the week at 3,097.74, up 1.9% from 3,041.32 last week. It’s down 4.1% year to date. The NASDAQ closed the week at 9,946.12, up 3.7% from 9,588.81 last week. It’s up10.8%year to date. 

U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 0.70%, unchanged from 0.71% last week. The 30-year treasury bond yield ended the week at 1.47%, almost unchanged from 1.45% last week.

Mortgage rates – The Freddie Mac Primary Mortgage Survey released on June 18, 2020, reported mortgage rates for the most popular loan products as follows: The 30-year fixed mortgage rate average was 3.13%, down from 3.21% last week. The 15-year fixed was 2.58%, down from 2.62% last week. The 5-year ARM was 3.09% almost unchanged  from 3.10% last week. Rates dropped late in the week. 

California existing home sales – The California Association of Realtors announced that existing home sales totaled 238,740 on a seasonally adjusted annualized basis. As expected that was down 41.4% from the number of homes sold last May. May sales consist mostly of homes that went under contract and in escrow in March and April when it was not permitted to even show a home in some cities. Fortunately, since May pending sales, homes that went under contract, have increased. The median price paid for a home in California decreased 3.7% year over year from last May. That marked the first year over year decrease in almost a decade. Experts were not surprised by this, as many of these sales represented people that either bought homes virtually, or viewed homes in person against city ordinances. Fortunately, those ordinances changed in the third week of April, and in person showings became permissible with safety restrictions statewide. Once that happened pending sales increased sharply. On a regional basis Los Angeles County saw a 1.4% increase in the median price, Ventura County saw a 3.1% increase, and Orange County saw a 1.2% drop in the median price from last May’s level. We are expecting the median price increases to be higher next month judging by the pending sales.