The summer doldrums have hit the stock market as the Dow finally broke its longest weekly winning streak since last August. This was a week without a lot of economic data and very low volume giving traders little to react to. The Dow ended the week at 15,425.51 down 1.49% from last week’s close of 15,658.36. The Nasdaq closed out at 3660.11, off .8% from last week’s close of 3,689.59. Even the S&P 500 was down, ending the week at 1,691.42, a drop of 1.07% from last week’s finish of at 1,709.67. It should be noted the markets are up almost 20% for the year!
Once again, concern over the Fed’s taper of the bond-buying program was responsible for much of the downturn. Richard Fisher, president of the Federal Reserve Bank of Dallas, stated on Thursday that he believed that cutting back on the stimulus program could begin as early as next month as long as economic data continues to improve.
Data released this week showed that U.S. wholesale inventories fell .2% in June even though a gain of .4% had been expected. This was the second month of wholesale inventory declines. Lower inventories can lead to higher prices, so this is a statistic that is looked at to forecast inflation risks.
The yield on the 10-year treasury note also slipped this week ending at 2.57% down from last week’s 2.63%. The rate was around 1.63% one year ago. The 10 year treasury note directly affects home mortgage rates.
This week the President spoke in Arizona addressing the issue of the housing bubble in 2007 and calling for mortgage reform. His proposal in part involves greatly diminishing the roles of Fannie Mae and Freddie Mac, the industry giants which own or guarantee over half of all home loans currently. There is a bipartisan bill in the Senate calling for a winding down of the two organizations. The Obama administration has indicated a desire to replace Fannie and Freddie with a system that allows the private market to buy home loans from lenders and then repackage them as securities for investors. The government would still be involved because it would insure or guarantee those securities at a cost to investors. Obama called for private capital to take a larger role in the mortgage market and also asked Congress to push through legislation to make it easier for homeowners to refinance at lower rates. As part of his focus on housing this week, he hosted a chat with online real estate syndicator Zillow and took questions via Twitter.
CoreLogic released a report showing that the Los Angeles metropolitan area topped the country in single-family home price gains among the 100 largest cities in June showing a 20.7% increase from a year ago. Home prices in California overall appreciated the second-highest in the country, up 21.4% behind only Nevada.
This week’s interest rates showed a slight increase. The Freddie Mac Weekly Primary Mortgage Market Survey showed a 30-year fixed rate at 4.40% up from last week’s 4.39% while the 15-year fixed held steady 3.39%. This time last year the survey showed a 30-year fixed rate of 3.59% and a 15-year fixed rate of 2.84%. With the treasury bond rates dropping the last two days rates today are slightly lower.
Although we have seen some seasonal slowing the real estate market is still very active. Prices are still rising, but it seems like they are not rising as sharply as they were in the last few months. Inventory levels are still at all time lows, but are higher than they were in May, June and July. Fortunately, I am part of a company that is taking a much higher number of listings propionate to the number of agents at other local brokerages. At the same time our buyer controlled sales are also much higher per agent than our competitors. If you want to know more, feel free to reach out to me at 310-963-7384 or ReviMendelsohn@gmail.com . Revi
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