The Freddie Mac Weekly Primary Mortgage Market Survey showed that the 30-year-fixed rate fell slightly, coming in at 4.17% down from 4.20% last week. The 15-year-fixed moved just a little, down to 3.30% from last week’s 3.31%. A year ago the 30-year fixed was at 3.93% and the 15-year was at 3.04%. After The release of the CPI report rates finished the week slightly higher. Rates are more like 4.25 for 30 year fixed conforming and about the same for jumbo. 15 year are around 3.375%.
The 10 year Treasury bond yield ended the week at 2.63%. It was 2.61% last Friday and 2.41% a year ago.
The best indicator of inflation the CPI Index for May was released earlier in the week. May’s rise in consumer prices showed 0.3 percent increase from April. This was double what was expected and the largest monthly increase since February 2013. With tensions escalating in Iraq, a major world oil producer, inflation is likely to push higher in the coming months. In the 12 months through May, consumer prices increased 2.1 percent, the biggest gain since October 2012. That followed a 2.0 percent rise in the period through April, marking the first back-to-back months in which the year-on-year CPI had risen at least 2 percent since early 2012. Stripping out food and energy prices, the so-called core CPI rose 0.3 percent, the largest increase since August 2011.
The Federal Open Market Committee met this week and the Fed announced that it plans to continue thetaper of the bond-buying program, cutting back by another $10 billion. This program known asQE3 has been tapered down significantly and The Fed plans to end all Treasury Bond and Mortgage purchases by the end of the year. This program brought down long term interest rates. The Fed also announced that they plan to on keeping the federal fund rates near zero until mid 2015. This will keep down short term rates. Fed Chair Janet Yellen has indicated that interest rates will remain low even after the Fed completely winds down its stimulus program. In remarks this week, Yellen pointed out that unemployment is still high and many are underemployed. She also shrugged off the CPI index increase as “noise” due to tensions in Iraq causing a rise in energy costs. She stated that real inflation is still below the 2% objective rate.
All three major stock indexes had a great week with the Dow and S&P 500 hitting records and the Nasdaq reaching a 14-year high. The Dow closed at 16,947.08 up 1.02% from last week’s close of 16,775.74. The Nasdaq also finished strong, closing at 4,368.04 up 1.33% from last week’s close of 4,310.65. The S&P 500 closed at 1,962.87, up 1.38% from last week’s 1,936.16.
Homebuilder confidence appears to be gaining ground again. The latest numbers from the National Association of Home Builder/Wells Fargo builder sentiment index rose to 49 in June, the highest since January and up from 45 in May. Readings below 50 indicate that builders see sales conditions as poor rather than good but builder are now the most confident they have been since January as they see more potential buyers shopping for new homes. This time last year, the index rose above 50 for the first time since the beginning of the housing recession. For the West alone, the June reading is at53, indicating that builders see good sales conditions for new homes.
The latest report from the Census Bureau showed that housing starts were down in May from the previous month but were higher than the year before. Single-family housing starts were down -5.9% from April but were up 4.7% from a year ago. Single-family housing completions in May were at a rate of 618,000; this is 2.1% above the revised April rate of 605,000.
The California Association of Realtors® reported closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 391,030 units in May which was -0.6% below the revised 393,480 in April and down -9.5% from a revised 432,140 in May 2013. This was the tenth straight decline on a month-over-month basis.
May’s median price increased 3.7% from April’s median price of $449,360 to $465,960 and was up11.7 % from the revised $417,140 recorded in May 2013. The statewide median home price has increased year over year for the previous 27 months. Housing inventory was unchanged in May, with the available supply of existing, single-family detached homes for sale holding steady at 3.6 months. The index was 2.6 months in May 2013. The median number of days it took to sell a single-family home fell to 31.6 days in May, down from 33.8 days in April but up from 27.1 days in May 2013.
For Los Angeles County alone the median price rose to $411,640 up 1.2% from the previous month’s $406,750, and up 12.5% from May 2013’s $365,990. Sales were up 6.9% from April but down -12.2% from May 2013. In Los Angeles County, the amount of inventory was 3.6 months up from 3.5 months in April and 2.5 months in May 2013. The median time on market was 38.7 days, down from 39.5 days in April but up from 27.9 months last April.
We are beginning to see some flattening of prices in many areas after a large run up so far this year. It is not unusual to see prices begin to flatten this time of year. We usually see the largest price gains in the Spring and I’d expect to see large gains again beginning next February lasting through May or June. Nevertheless we are seeing some price pressure in many areas where some homes are just too high and are beginning to sit. Don’t get me wrong we are still seeing plenty of multiple offers on well priced homes! However, on homes that are priced above previous sales or at the price of the very highest sale we are seeing those homes sit!