March kicked off with lower interest rates this week, but don’t take my word from it–hear it from Syd Leibovitch’s weekly Market Update.

The Labor Department reported that the nation added 175,000 jobs last month, a pace that beat economists’ predictions of 149,000 jobs added.  This number was down from the average of 189,000 over the last 12 months but much stronger than the last two months. The unemployment rate rose 0.1% to 6.7%. In December, the economy added 84,000 jobs, and in January it created 129,000 positions. This stronger number means that the Fed will continue with the taper of the bond and mortgage buying program and perhaps could taper quicker in the future, which will lead to higher interest rates.

The jobs numbers helped raise stock prices on Friday, however continued worries over the tensions in the Ukraine had investors selling off Monday, before recovering during the week. this could put stress on the markets in coming weeks.The Dow rose again this week to 16,452.72up 0.80% from last week’s close of 16,321.90. The Nasdaq closed at 4,336.22 up 0.65% from last week’s close of 4,308.12. The S&P 500 ended the week at 1,878.04, up 0.99% from last week’s 1,859.45 close.

The stock market was also bolstered when the Federal Reserve released its Beige Book Comments earlier in the week. This reflects an in-depth view of economic activity. There has been a lot of uncertainty over December and January employment numbers, which were dismal and far below expectations, as well as tapered down auto and retail sales. The Beige Book pointed out more in depth how unusually unseasonal weather played a significant role in these sectors, which clearly calmed investors. That and today’s jobs report allowed the stock market to end up for the week after dropping over 200 points Monday over the Ukraine crisis.

The 10 year treasury note yield rate rose to  2.80% after closing at 2.66% last week. This reflects growing optimism in the economy which means less stimulus, and possibly inflation in the future. It also directly impacts mortgage rated pushing them upward.

The Freddie Mac Weekly Primary Mortgage Market Survey showed that the 30-year-fixed rate was down to 4.28% from 4.37% last week.  The 15-year-fixed was down to 3.32% from last week’s 3.39%.   A year ago the 30-year fixed was at 3.52% and the 15-year was at 2.76%. This being said, the survey is conducted at the beginning of the week. Rates dropped at the end of last week and Monday after the Russia, Ukraine situation on fears of a slowdown in the economy due to sanctions, oil distribution and spillover into the European economy. There was also discussions of other action. The stock market dropped over 200 points Monday. By Tuesday the rhetoric began to “dial down” a little and the stock market recovered quickly throughout the week. When money moves out of stocks it moves to longer term more secure investments like bonds driving rates down. The survey rates reflect the beginning of the week better than the end of the week as rates ended the week about 1/8% higher than they were Monday and Tuesday. Loans at $417,000 and below are closer to 4.5% today for 30 year terms and 3.5% for 15 year loans. Higher balance and Jumbo loans are about another 1/4 % higher, 4.75% and 3.75%.
 
The Commerce Department reported that U.S. construction spending showed a small increase in January, edging up 0.1% which was much lower than the revised 1.5% gain in December. Homebuilding was up 1.1% in January with single-family construction up 2.3% and apartment building up 1%. Non-residential construction fell 0.2% and office building was flat. Bad weather was once again a contributing factor in these numbers.

CoreLogic reported that prices rose 0.9% in January after being down -0.1% in December. During the past 12 months homes are up 12%, the biggest year-over-year gain in more than eight years. California registered the second largest price gains year over year, 20.3% beaten out only by Nevada with 22.2%. The Los Angeles/Long Beach/Glendale MSA rose by 19.7%.

With the time change on Sunday we will begin to see longer days with longer home shopping hours! It’s a seasonal business with the most active time upon us. It’s going to be an incredible several months. Expect large price increases, and an big increase in the number of sales!

Have a great weekend and don’t forget to turn your clocks ahead an hour before going to bed Saturday night!
Syd


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