Interest rates have dropped over the last couple of weeks. The Freddie Mac Weekly Primary Mortgage Market Survey showed that the 30-year-fixed rate dropped to 4.23% from 4.32% last week. The 15-year-fixed fell to 3.33% from last week’s 3.40%. A year ago the 30-year fixed was at 3.53% and the 15-year was at 2.77%. Obviously, most loans needed in our markets are over the conforming limit ($417,000). Those rates are about 1/2% higher.
The unemployment rate nationwide dropped from 6.7% to 6.6%, the lowest rate seen since October 2008. There were 113,000 jobs created in January which was an increase from December’s revised 75,000 number but lower than the 185,000 economists were predicting. Some speculate that continued extreme weather across the country is slowing the rate of job creation however there were strong gains in the construction sector which accounted for the highest numbers. It looks like the construction we are seeing all over town is reflected in the numbers! There were declines in retail, utilities, government, and education and health employment numbers. Unusually cold weather played a part in the number being lower than expected as much of the country faced record cold temperatures. The participation rate was up slightly to 63.0% from 62.8%. It is thought that more people are feeling that a jobs are becoming easier to find and are entering the workforce.
The Fed has a 6.5% threshold for considering short term rate increases in addition to the taper of the bond and mortgage buying program already underway. It is anticipated that the Fed will wait until the taper is further along before considering rate increases especially if inflation remains In check. In the past they have said that they will keep short term rates near 0% until 2015. The next Fed policy planning meeting is set for mid March. The new Chairman of the Federal Reserve, Janet Yellen, took over for Ben Bernanki this week. She is the first woman to chair the Fed and is expected to continue with low rates for now.
This week the stock market ended on a high note with a two-day rally that helped ease some of the market’s recent losses. Investors did not react negatively to the jobs report, focusing instead on the lowering of the overall unemployment rate and the slight rise in the participation rate. The Dow closed out the week at 15,698.85 up 0.61% from last week’s close of 15,698.85. The Nasdaq was also up, ending the week at 4,125.86 up 0.54% from last week’s 4,103.88 close. The S&P 500 ended the week at 1797.02, up 0.81% from last week’s 1,782.59 close.
The 10-year Treasury note yield rate rose slightly to 2.71% after ending last week at 2.67%. It was 1.99% a year ago.
The Commerce Department reported that U.S. construction spending increased 0.1% in December to a seasonally adjusted annual rate of $930.5 billion. This was down from a revised 0.8% increase in November. The December increase was driven by a 2.6% rise in private residential construction, which hit an annual pace of $352.6 billion, highest since June 2008. Spending on single-family homes was up 3.4% in December and up 21.6% from a year earlier. Construction of apartments and condominiums was up 0.5% in December and up 27.3% from December 2012.
The December report from CoreLogic said that home prices slipped were down -0.1% from November to December, the third straight month-to-month drop after eight straight months of rising prices. For all of 2013, prices rose 11% the highest rate of annual increase since 2005. CoreLogic’s price figures are not adjusted for seasonality.
We are seeing the Real Estate market coming into “high gear” after a seasonal year end slowing. Once again we are seeing major price increases in all areas and all price ranges in our marketplace. Low inventory, multiple offers, and rising prices has 2014 shaping up to be similar to 2013!
Have a wonderful weekend!
If you’d like more information on the San Fernando Valley or Los Angeles, or to have help looking for your next home, please feel free to reach out! I’m happy to help, no obligation.