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Stocks lost ground this week

Stock markets finished the week lower this week for just the third weekly loss of the year. The Federal Reserve issued comments this week announcing that they had put interest rate hikes on hold for the remainder of 2019, citing low inflation numbers and increased risk of slowing to the economy due to global pressures. This led investors to fear that the Fed knows something investors don’t, and they became more cautious.

Bond yields surged, which drove down mortgage rates. 

The Dow Jones Industrial Average closed the week at 25,502.32, down 1.3% from 25,848.87 last week. It’s up 9.3% year-to-date. 

The S&P 500 closed the week at 2,800.71, down 0.8% from 2,822.48 last week. It is up 11.7% year to date. 

The NASDAQ closed the week at 7,642.67, down 0.6% from 7,688.53 last week. The NASDAQ is up 15.2% year-to-date. 

Treasury Bond Yields drop to the lowest levels since 2017

The 10-year treasury bond closed the week yielding 2.44%, down from 2.59% last week. The 30-year treasury bond yield ended the week at 2.88%, down from 3.02% last week. We watch treasury bond yields because mortgage rates follow bond yields. 

30-year mortgage rates dropped to 4% this week

The March 21, 2019, Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 4.28%, down from 4.31% last week. The 15-year fixed was 3.71%, down from 3.76% last week. 

The 5-year ARM was 3.84%, unchanged from 3.84% last week. Interest rates dropped on Thursday and Friday after the Freddie Mac survey was released. By the end of the day Friday, we had clients locked into 30-year fixed rates below 4%!

California existing home sales rebound in February

The California Association of Realtors released their data for February home sales. Closed escrows on existing homes rebounded from January’s 10-year low level of 358,470 units, and increased 11.3% to 399,080 units on a seasonally adjusted annualized basis in February. That marked a 5.6% year over drop from 422,910 closings last February. 

The median price for a home in California was $534,140, up 2.2% year-over year from $522,440 last February. The median price is the point at which half the homes sell for more and half sell for less. 

Inventory levels have risen for the 11th consecutive month after dropping for three straight years to historic lows. There was a 4.6-month supply of homes for sale in February, up from a 3.6 month supply in February 2018. 

U.S. existing home sales surged 11.8% in February

The National Association of Realtors announced that the number of sales of single-family homes, condominiums, townhomes, and co-ops increased by 11.8% from January to a seasonally adjusted annual rate of 5.51 million in February. 

Year-over-year sales were down 1.8% from February 2018. The median price paid for a home nationwide was up 3.2% from last February. That marked the 84th straight month of year-over-year increases in the median price. The inventory level was was at a 3.5 month supply at the current sales level. That was just barely higher than a 3.6 month supply in February 2018. 

Stock market terms defined

  • ARM – “A 5-year ARM is a loan with a fixed rate for the first five years. After that, it has an adjustable rate.” (LendingTree.com
  • Down Jones Industrial Average – “An index that tracks 30 large, publicly-owned companies trading on the New York Stock Exchange and the NASDAQ.” (Investopedia.com)
  • Federal Reserve System – “Often referred to as the Federal Reserve or simply “the Fed,” is the central bank of the United States. It was created by Congress to provide the nation with a safer, more flexible, and more stable monetary and financial system.” (FederalReserve.gov)
  • Freddie Mac – (Federal Home Loan Mortgage Corporation or FHLMC) “A government-owned corporation that buys mortgages and packages them into mortgage-backed securities.” (TheBalance.com)
  • Mortgage – “An agreement that allows you to borrow money from a bank or similar organization (such as a credit union) by offering something of value, esp. in order to buy a house or apartment” (Cambridge Dictionary
  • NASDAQ – Acronym for the National Association of Securities Dealers Automated Quotations. “A global electronic marketplace for buying and selling securities, as well as the benchmark index for U.S. technology stocks.” (Investopedia.com)
  • S&P 500 – “The S&P 500 index is a basket of 500 of the largest U.S. stocks, weighted by market capitalization. The index is widely considered to be the best indicator of how large U.S. stocks are performing on a day-to-day basis.” (Motley Fool)
  • Stock market – “The stock market is where investors buy and sell shares in public companies.” (NerdWallet.com)
  • Treasury bond yield – “Treasury yields are the total amount of money you earn by owning U.S. Treasury bills, notes, or bonds. The U.S. Treasury Department sells them to pay for the U.S. debt. … Treasury yield prices are based on supply and demand.” (The Balance.com)

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.

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