Stock markets slightly higher this week – All eyes were on the Federal Reserve the last two weeks. Stocks dropped over the last two weeks on speculation that the Fed would raise its benchmark rates at the conclusion of their meeting on March 15, which they did. Following, the hike stocks actually rose making up about 1/2 of the drop over the last two weeks on speculation of a rate hike. It’s a funny thing, investors expect a hike which will increase borrowing costs and hurt profits, so stocks drop. Sometimes the hike doesn’t happen and rather than stocks rising they fall, because investors think that no hike means the economy is not as good as they thought and maybe the Fed knows something they don’t know. In this instance, the Fed’s statements about the strength of the economy outweighed the fears of higher borrowing costs and stocks increased. The Dow gained over 100 points after the rate hike was announced, making up all its losses earlier in the week. The Dow Jones Industrial Average closed the week at 20,914.62, up slightly from last week’s close of 20,908.72. The S&P 500 ended the week at 2,378.25 almost unchanged from its close of 2,372.60 last week. The NASDAQ closed the week at 5,901.00, up from last week’s close of 5,861.73.
U.S. Treasury Bond yields dropped slightly despite Fed rate hike – The 10-year U.S. Treasury Bond closed the week yielding 2.50%, down from 2.58% last Friday. The 30-year Treasury Bond yield closed the week at 3.11% down from 3.16% last week. Mortgage rates follow bond yields, so we watch treasury bonds closely.
Mortgage rates higher again this week – The Freddie Mac Primary Mortgage Survey released on March 9, 2017, reported that average mortgage rates from lenders surveyed for the most popular mortgage products were as follows: The 30-year fixed rate average was 4.30%, up from 4.21% last week. The 15-year fixed average rate was 3.42%, 3.50%, up from 3.42% last week. The 5/1 ARM average rate was 3.28%, up from 3.23% last week.
California home sales pace, and prices continue to rise – The number of existing homes sold in California increased 4.7% month over month from January. Year over year the number of homes sold were up 4.9% from February 2017. The median price paid for a home in California was 478,790. The median price represents the point at which 1/2 the homes sell for more, and 1/2 sell for less. Month over month the median actually dropped, which we have often seen over the last year, as one month is not a large sample. Month over month the median dropped 2.2% from January. Year over year, which is a better indicator of price movement, were up 7.6 in February from February 2016. Inventory increased to a 4 month supply as more homeowners began putting homes on the market. That was up from 3.7 months in January, but down from 4.7 months last February. Inventory levels are also better to compare year over year due to seasonal purposes.