Economic update for the week ending November 25, 2017

Snapping a two week losing streak stocks ended the week higher –In a holiday shortened week stocks rose. Tax reform was the focus of investors this week. While it seems likely that some changes will be made to the Senate and House proposals, a significant corporate tax rate reduction seems to be agreed on. It was also revealed that reductions on personal rates that expire, the corporate rate reductions are permanent. Experts are also expecting a 3.8% increase in November and December retail sales, which is just above last years holiday sale increase. The Dow Jones Industrial Average ended the week at 23,557.99, up from 23,358.24 last week. It’s up 19.2% year-to-date. The S&P 500 closed the week at 2,602.42, up from its close last week of 2,578.85. The S&P is up 16.2% YTD. The NASDAQ closed the week at 6,889.16, up from its last week’s close of 6,782.79. It’s up 28% year-to-date.
Bond yields unchanged this week – The 10-year Treasury bond closed the week at 2.34%, unchanged from 2.35% last week. The 30-year treasury yield ended the week at 2.76%, unchanged from 2.78% last week. Mortgage rates follow treasury bond yields so we watch bond yields carefully.
Mortgage Rates unchanged this week – The November 22, 2017 Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 3.92%, down slightly from 3.95% last week. The 15-year fixed was 3.32%, almost unchanged from 3.21% last week. The 5-year ARM was 3.22%, almost unchanged from 3.21% last week.
Extremely low supply of housing for sale causes a downtick in year-over-year sales in October, and continues to drive prices up – The California Association of Realtors reported that existing single family home sales totaled 431,020 in October on a seasonally annualized rate. That represents a 0.8% increase from September, but a 3.4% decrease from last October’s sales pace. The statewide median price was $546.430, up 6.1% from October 2016. The unsold inventory index dropped to a 3 month supply of homes for sale in October from 3.2 month supply in September. There was a 3.4 month supply of homes for sale in October 2016. Year-over-year there are 11.5% fewer homes for sale this October than last October. Pending home sales (homes that went under contract) also dropped 2.6% from last October. 
Author, 
Syd Leibovitch