Except for the Bond yields and Mortgage Rates that went down last week, in today’s Market Update you can also see the summary of the economic update for for the month of May.
The Dow Jones Industrial Average ended the week at 21,206.29, up from 21,080.28 last week. The S&P 500 closed the week at 2,439.07, up from its close last week of 2,414.82. The NASDAQ closed the week at 6,305.80, up from last week’s close of 6,210.19.
Bond yields down this week- Treasury Bond yields dropped following disappointing jobs report as investors feel no risk of inflation. The 10-year Treasury bond closed the week at 2.15%, down from 2.25% last week. The 30-year treasury yield ended the week at 2.80%, down from 2.92% last week. Mortgage rates follow treasury bond yields so we watch bond yields carefully.
Mortgage Rates down this week – The May 1, 2017 Freddie Mac Primary Mortgage Survey reported that the 30 year fixed mortgage rate average was 3.94%, down from 3.95% last week. The 15 year fixed was unchanged at 3.19%. The 5-year ARM was 3.11%, up from 3.07% last week. Rates dropped on Friday. Next weeks average rates should be lower.
Economic update for the month ending May 31, 2017
U.S. employers add 138,000 new jobs in May – Unemployment rate drops to 16 year low – The Bureau of Labor Statistics reported that the economy added 138,000 new jobs in May. Economists had expected job gains of 185,000. Over the past three months the economy has averaged just 121,000 net new jobs a month. This is well below monthly averages of over 200,000 last year. Economists are mixed on whether after 80 straight months of job growth and the economy nearing full employment that there are just not enough people looking for jobs, or if the strength of the labor market is stalling. Fed chairwoman, Janet Yellen, has said the economy needs to add about 100,000 net new jobs monthly just to keep up with population growth. The U.S. economy has added over 16 million jobs since 2010. That’s nearly double the number of jobs lost during the recession. The unemployment rate dropped to 4.3%, its lowest level since 2001. Wages rose just 2.5% over the past 12 months ending May 31. Usually as unemployment dips wages rise. Stagnant wages have experts puzzled.
Stock markets rise in May – A combination of higher oil prices, healthy corporate earnings, and an upward revision in the first quarter GDP pushed stocks up in May. The Dow Jones Industrial Average ended the month at 21,008.65, up from its March 31, 2017 close of 20,940.51. The S&P 500 closed the month at 2,411.80, almost unchanged from its March close of 2,384.20. The NASDAQ closed the month at 6,198.52, up from last month’s close of 6,047.61.
Treasury Bond yields end month lower – The 10-year Treasury bond closed on May 31, 2017 at 2.21% down from 2.29% at the end of April. The 30-year treasury yield ended the month at 2.87%, down from 2.96% last month.
Mortgage Rates lower in May – Mortgage rates dropped below 4% and are at a 6 month low. The June 1, 2017 Freddie Mac Primary Mortgage Survey reported that the 30 year fixed mortgage rate average was 3.94%, down from 4.03% on April 27, 2017. The 15 year fixed was 3.19%, down from last month’s close of 3.27%. The 5-year ARM was 3.11%, down from 3.12% on April 27.
The number of existing homes sold in California decline in April – Prices continue to rise – The California Association of Realtors reported that existing home sales statewide declined 2.4% in April from March to a seasonally adjusted rate of 406,300 in April. That was 1.7% below the sales rate last April. The Southern California region had the largest decline. The number of sales were down 6.5% from April 2016. The decline in sales was attributed to a historically low number of homes for sale. Statewide there was a 3.5 month supply of homes for sale in April. That was the lowest April reading since C.A.R. has been tracking their Unsold Inventory Index. New listings taken statewide have declined for 22 straight months, falling 10.5% from last April. Prices continue to move up. The statewide median price was $536,750. It increased 3.7% from March’s median price of $517,490. Year over year the median price increased 5.4% from $509,240 in April 2016.
California pending home sales fewer in April – The California Association of Realtors reported that an extremely low supply of homes for sale has caused the number of new contracts signed on existing homes in California to fall for the fourth straight month. The number of new contracts signed decreased 7.4% from the number of pending sales last April. Southern California fared much better that the state as a whole. Southern California pending sales were down 2.8% from last April. Los Angeles pending sales were down 4.7% from April 2016.
Foreclosures at lowest level since 2005 – Foreclosure filings dropped 23% from one year ago. The number of homes in default have hit their lowest level since November 2005.
U.S. Existing homes sales pace declines in April – The National Association of Realtors reported that the number of homes sold in April declined 2.3% from March’s sales pace. Sales nationwide were still 1.6% above the number if sales last April. Simply put the number of new listings are not keeping up with the pace of sales. Low inventory also causes prices to rise. The median price of a home rose 6% nationally from last April. April marked the 62nd straight month of year over year price gains.
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