Stock markets closed higher for the eighth straight week, the longest streak since 2006 – Stocks rose again this week as more positive corporate earnings were released, The House released a tax plan which cut corporate taxes, The President nominated a new Fed Chief, The Federal Reserve did not increase rates at their policy meeting, and hiring rebounded in October. The Dow Jones Industrial Average ended the week at 23,539.19, up from 23,439.19 last week. It’s up 19.1% year-to-date. The S&P 500 closed the week at 2,587.84, up from its close last week of 2,581.07. The S&P is up 15.6% YTD. The NASDAQ closed the week at 6,764.44, up from its last week’s close of 6,701.26. It’s up 25.7% year-to-date.
Bond yields drop this week – The 10-year Treasury bond closed the week at 2.34%, down from 2.53% last week. The 30-year treasury yield ended the week at 2.82%, down from 2.93% last week. Mortgage rates follow treasury bond yields so we watch bond yields carefully.
Mortgage Rates unchanged this week – The November 3, 2017 Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 3.94%, unchanged from 3.94% last week. The 15-year fixed was 3.27%, almost unchanged from 3.25% last week. The 5-year ARM was 3.23%, also almost unchanged from 3.21% last week.
Economic update for the month ending October 31, 2017
U.S. Economy adds 261,000 jobs in October – Unemployment rate drops to 4.1% – The Bureau of Labor Statistics reported that the economy added 261,000 jobs in October. This was a rebound from September when the economy gained just 18,000 jobs in a revised estimate after the labor department initially reported a loss of 33,000 jobs, which marked the first month in seven years that jobs were lost. That revision makes October the 85th consecutive month of job gains. September’s disappointing figures were largely blamed by experts on job losses due to devastating hurricanes which hit southern states and Puerto Rico. The 261,000 job gains represents that those experts were correct. The unemployment rate dropped to 4.1%, from 4.2% in September. It marks the lowest unemployment rate in 17 years. Wages were disappointing, as wages dropped last month. Wages grew 2.4% from one year ago. Previous months had gains which had been 2.5% higher year-over-year.
Stock markets hit record highs just about every day in October – Third quarter corporate earnings boosted stock prices in October as most companies reported earnings that exceeded expectations. The Dow Jones Industrial Average ended the month at 23,348.74 upfrom its August 31 close of 22,405.08. The Dow is up over 19% year to date. The S&P 500 closed the month at 2,572.84, up from its August close of 2,519.36. The S&P is up over 15% year to date. The NASDAQ closed the month at 6,701.26, up from last month’s close of 6,495.26!!It’s up 25.7% year to date.
Treasury Bond yields slightly higher in October – The 10-year Treasury bond closed on October 31, 2017 at 2.38%, up from 2.33% at the end of September. The 30-year treasury yield ended the month at 2.88%, up from 2.86% last month.
Mortgage Rates slightly higher in October – The November 2, 2017 Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 3.94%, up from 3.83% on September 28, 2017. The 15-year fixed was 3.27%, up from last month’s close of 3.13%. The 5-year ARM was 3.23%, up from 3.20% on September 28.
Third quarter GDP beats expectations – The Commerce Department reported that the Gross Domestic Product, the broadest measure of of growth in the economy, unexpectedly rose 3% in the third quarter after a 3,1% increase in the second quarter. Analysts expected that the rate of growth would be 2.5%, due to some slowing caused by hurricane damaged areas.
September U.S. Existing Home Sales and Prices – The National Association of Realtors reported that existing home sales increased 0.7% in September from August sales levels. Year over year closed escrows on existing homes were 1.5% below last September’s pace. Most of that decline was attributed to hurricane damaged areas which showed large declines in sales. Existing home sales include re-sales of one to four unit homes, town-homes, condominiums, and Co-ops. The median price nationwide for an existing home increased 4.2% from September 2016, the 67th straight month of year over year increases. Total housing inventory was 1.6% higher in September than in August, but 6.4% below last September, representing its 28th straight month of year over year decreases in the amount of homes for sale. The unsold inventory index fell to a 4.2 month supply of homes for sale, down from a 4.5 month supply one year ago.
U.S. New housing starts drop 4.7% in September – Hurricane damaged regions account for the drop – The Commerce Department reported that permits for new residential construction (single family and multi family) dropped 4.7% in September from August levels. Single family housing starts dropped 4.6%. The decline was attributed to hurricane damaged areas. Year to date housing starts were up 9.1% in September, compared to the first nine months of 2016. Breaking out single family housing, the hurricane damaged south posted a 15.3% decline in new housing starts in September. All other regions in the U.S. posted month over month gains. New permits for single family construction grew 15.7% in the western region in September over August levels. Multi family housing starts were down in just about every region across the country.
California existing home sales and prices continue to increase in September – The California Association of Realtors reported that existing single family home sales totaled 436,920 in September on a seasonally adjusted annualized rate. That’s up 2.2% from August and 1.7% from last September. The median price paid for a home in California was 555,410 in September, down 1.8% from August, but up 7.5% from last September. The number of active listingscontinued to decline in September. They were down 11.2% from September 2016. The Unsold Inventory Index showed a 3.2 month supply of housing supply, up from 2.9 months in August, yet down from a 3.5 month supply in September 2016. Housing inventory levels are at record low; however, the number of sales are above or close to the highest numbers ever recorded as the number of listings are not keeping up with the brisk sales pace. A normal market has a 6 to 7 month supply of housing.