Economic update for the week ending November 9, 2019
Stocks up for the fifth straight week - Stock markets extended their gains and finished the week at all time record highs. Recession fears have been pretty much eliminated, as continued trade progress and a relaxing of tariffs has occurred. Third quarter corporate earnings were higher than expected. New jobs have been strong. Unemployment is near 50 year lows. Inflation has been tame, and the Fed has lowered rates. All these factors have investors more bullish and have drives stocks to record highs. The Dow Jones Industrial Average closed the week at 27,681.24, up 1.2% from 27,347.31 last week. It is up 18.7% year to date. The S&P 500 closed the week at 3,093.08, up 0.9% from 3,066.91 last week. It is up 23.4% year to date. The NASDAQ closed the week at 8,479.31, up 1.1% from 8,386.40 last week. The NASDAQ is up 27.7% year to date.
U.S. treasury bond yields up sharply this week - The 10-year treasury bond closed the week yielding 1.94%, up from 1.73% last week. The 30-year treasury bond yield ended the week at 2.43%, up from 2.21% last week. We watch treasury bond yields because mortgage rates often follow bond yields.
Mortgage rates slightly lower this week - The November 7, 2019 Freddie Mac Primary Mortgage Survey reported mortgage rates for the most popular loan products as follows: The 30-year fixed mortgage rate average was 3.69%, down from 3.78% last week. The 15-year fixed was 3.13%, down from 3.19% last week. The 5-year ARM was 3.39%, down from 3.43% last week. Unfortunately, rates rose late in the week. Next week’s rates will be 1/8% - 1/4% higher next week.
Lower rates and higher incomes make homes more affordable in the third quarter of 2019 - The California Association of Realtors reported that 31% of California households could afford to purchase a $613,470 median priced home in the third quarter. That was up from 30% in the second quarter of 2019 and up from 27% in the third quarter of 2018. The income needed to qualify to purchase a median priced home with a monthly payment of $3,010 was $120,400. 43% of California households could afford to purchase a $465,000 median price condominium or townhouse with a yearly income of $91,200 needed to qualify.
Have a great weekend!