Stock markets dropped slightly last week after three weeks of record high closings – The October Consumer Price Index showed that prices have risen 6.2% year-over-year. That’s the largest year-over-year increase since 1990. Experts expected an increase in the 5% range so this took them by surprise. It is widely felt that much of the inflation numbers are temporary due to supply shortages, but experts are now feeling that the trillions of dollars in stimulus that has been injected into the economy due to the pandemic may cause inflationary conditions for a more prolonged period of time. The Dow Jones Industrial Average closed the week at 36,100.31, down 0.6% from 36.327.95 last week. It is up 18% year-to-date. The S&P 500 closed the week at 4,682.85, down 0.3% from 4,697.53 last week. It is up 24.6% year-to-date. The NASDAQ closed the week at 15,860.96 down 0.7% from 15,971.59 last week. It is up 22.9% year-to-date.
U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 1.58%, up from 1.45% last week. The 30-year treasury bond yield ended the week at 1.95%, up from 1.87% last week. We watch bond yields because mortgage rates often follow treasury bond yields.
Mortgage rates – The November 10, 2021, Freddie Mac Primary Mortgage Survey reported mortgage rates for the most popular loan products as follows: The 30-year fixed mortgage rate was 2.98%, down from 3.09% last week. The 15-year fixed was 2.27%, down from 2.35% last week. The 5-year ARM was 2.53% almost unchanged from 2.54% last week. Following the release of the inflation numbers mortgage rates increased at the end of the week. The 30-year was over 3% on Friday.
California housing affordability improved in the third-quarter – The California Association of Realtors published their third-quarter housing affordability report this week. They found that 24% of California households could afford to purchase a $814,580 median priced home. That is up from 23% in the second-quarter of 2021, but down from 28% in the third-quarter of 2020. A minimum income of $148,400 was needed to qualify for the monthly payment of $3,710 which included principal, interest, and taxes on a 30-year fixed rate mortgage at a 3.07% rate. Condominiums were more affordable. The report found that 37% of California households were able to afford a $600,000 median priced condo or townhouse. A minimum annual income of $109,200 was needed to qualify for the monthly payment of $2,730.
The October home sales reports will be released by the California Association of Realtors and the National Association of Realtors next week.
Sources:
- Rodeo Realty, Inc.