Fed Chief Janet Yellen testified in Washington this week before Congress. She indicated that while the economy will likely have a better year in 2014 than in 2013, weakness in the housing sector could impact that forecast. She continues to expect the federal bond-buying program to end this fall. She reiterated that she plans to keep interest rates low until the economy is on surer footing. There are two trends that she finds worrying: long-term unemployment and growing income inequality.
The Labor Department reported that there were 4 million job openings in March, down slightly from 4.1 million in February. There were 4.6 million hires and 4.4 million total job separations in March, down slightly from 4.5 million in February. The rate of job layoffs and discharges was 1.1% down from 1.2% in February and the quits rate remained the same at 1.8%.
The Commerce Department reported that wholesale inventories rose 1.1% in March and whole sale sales rose 1.4%. Inventories of durable goods rose 0.7%
The Dow hit a record close of 16,583.34 up 0.43% from last week’s close of 16,512.89. The Nasdaq closed at 4,071.87 down –1.26% from last week’s close of 4,123.90. Apple was down 0.4% on news that it plans to buy Beats Electronics for a reported $3.2 billion. The S&P 500 ended the week at 1,878.48, down –0.16% from last week’s 1,881.48.
The Freddie Mac Weekly Primary Mortgage Market Survey showed that the 30-year-fixed rate hit a new low for the year, falling to 4.21% from 4.29% last week. The 15-year-fixed fell to 3.32% from last week’s 3.38%. A year ago the 30-year fixed was at 3.32% and the 15-year was at 2.61%. These rates are for loan amounts up to$417,000. Higher loan amounts have rates about 1/4% higher. The lower numbers are attributed to a reaction to the GDP number for the first quarter of the year which showed a slow rate of economic growth, this drop is likely only very temporary. This week’s weekly report on mortgage applications from the Mortgage Bankers Association showed that for the first time since 2009 there are more purchase applications than refis as refinances slipped to 49%.
The 10 year Treasury bond yield ended the week at 2.61%. It was 2.60% last Friday and 1.81% a year ago.
A new report from RealtyTrac showed that all-cash purchases for the first quarter of 2014 soared to a record high 42.7% up from 38% in the previous quarter and just 19% in the first quarter of 2013. RealtyTrac reported that around 33% of all home purchases were paid in cash in California in the first quarter. This was the highest level since 2011. Many all-cash buyers are investors, second-time home owners, or foreign buyers. According to the data, a high percentage of home sales paid in cash in Southern California areas such as Beverly Hills, Arcadia and San Marino.
The National Association of Realtors released their Realtors® Confidence Index that shows 33% of existing homes purchased during the first quarter were all-cash deals. That’s up from 31% from all of last year and 29% in 2012.
The number of building permits issued in the Southland jumped 44% last year according to recent data from the Census Bureau. There were 25,198 units of housing permitted in Los Angeles and Orange Counties last year, up from about 17,500 in 2012 and triple the amount seen at the bottom of the housing market in 2009. This year should see another rise in permits although we still have a way to go before we hit the swell of activity seen in the mid-2000s.
CoreLogic reported that home prices rose 11.1% in March nationwide compared to one year ago. Prices have now risen year over year for 25 consecutive months. Prices were up 1.4% from February. California saw the greatest price appreciation (including distressed sales) in March, rising 17.2%. In the Los-Angeles-Glendale-Long Beach Metropolitan Area prices were up 17.1%.
I hope you have a great weekend and Happy Mothers Day to all moms especially mine, who reads this update!
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