Economic Update for the week ending February 1, 2020
Stock Markets drop on fears of Coronavirus - Stocks had their worst week since October after investors grew concerned about the economic impact of the Coronavirus. The World Health Organization declared an international public-health emergency. This week the Fed left interest rates unchanged. The Commerce Department reported that the U.S. GDP, the broadest measure of the economy, grew at a rate of 2.1% in the fourth quarter of 2019, and at a rate of 2.3% for the full year of 2019. The Dow Jones Industrial Average closed the week at 28,256.03, down 2.5% from 29,989.73 last week. It’s down 1.0% year to date. The S&P 500 closed the week at 3,225.52, down 2.1% from 3,296.47 last week. It’s down 0.2% year to date. The NASDAQ closed the week at 9,150.94, down 1.8% from 9,314.91 last week. It’s up 2.0% year to date.
U.S. treasury bond yields drop back to near record lows – The 10-year treasury bond closed the week yielding 1.51%, down from 1.70% last week. The 30-year treasury bond yield ended the week at 1.99%, down from 2.14% last week. We watch treasury bond yields because mortgage rates often follow bond yields.
Mortgage rates - The Freddie Mac Primary Mortgage Survey released on January 30, 2020 reported mortgage rates for the most popular loan products as follows: The 30-year fixed mortgage rate average was 3.51%, down from 3.60% last week. The 15-year fixed was 3.0%, down from 3.04% last week. The 5-year ARM was 3.24%, down from 3.28% last week.
January 31, 2020 Month End Economic Update
The Dow Jones Industrial Average ended the month at 28,256.03, down 1.0% from 28,538.44 on December 31. The S&P 500 closed the month at 3,225.52, down 0.2% from 3,230.78 at the end of 2019. The NASDAQ closed the month at 9,150.94, up 2.0% from 8,972.60 on December 31, 2019.
U.S. Treasury Bond Yields dropped in the first month of 2020 - The 10-year U.S. treasury bond yield closed the month at a 1.51%, down from 1.92% on December 31. The 30-year treasury yield ended the month at 1.99%, down from 2.30% on Dec. 31.
Mortgage Rates dropped in January - The January 30, 2020 Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 3.51%, down from 3.72% on January 2, 2020. The 15-year fixed was 3.0%, down from 3.16% on Jan 2. The 5-year ARM was 3.24%, down from 3.46% on January 2 ,2020.
California existing home prices surged in December - The California Association of Realtors reported that existing home sales totaled 398,880 in December on a seasonally adjusted annualized rate, up 7.4% from December 2018. The median price paid for a home in December was $614,090, up 10.3% from December 2018. That marked the largest year over year price increase since May 2014, and the first double digit year over year price increase in 5 1/2 years. Inventory levels continued to drop. There was just a 2.5-month supply of homes listed for sale in December, down from a 3.5 month supply one year ago. Inventory levels dropped 26.5% from one year ago, and December marked the lowest inventory level in 7 years. On a regional basis, in Los Angeles County the median price increased 9.0% year over year. In Orange County the median price increased 7%. In Ventura County the median price increases 2.7%.
U.S. Existing home sales surge in December - The National Association of Realtors reported that the number of existing homes sales surged 10.8% in December, from the number of homes sold nationwide in December 2018. The median price increased 7.8% year over year in December. That marked the 94th straight month of year over year price increases. There was a 3-month supply of homes for sale, down from a 3.7 month supply last December.
The U.S. Jobs report will be released next Friday.