Stock markets ended the month higher in November – The October CPI report that was released in November showed that inflation, while still near a 40-year high, dropped to 7.7%, its lowest reading since January. It peaked at 9.1% in June. Following the release of the report stock prices increased and long term bond yields and mortgage rates dropped significantly. The Dow Jones Industrial Average closed the month at 34,589.24, up 5.7% from 32,732.95 on October 30. It’s down 4.8% year-to-date. The S&P 500 closed the month at 4,079.97, up 5.4% from 3,871.98 last month. The S&P is down 14.4% year-to-date. The NASDAQ closed the month at 11,468.24, up 4.4%% from 10,988.15 last month. It is down 26.7% year-to-date.
U.S. Treasury bond yields – The 10-year treasury bond closed the month yielding 3.68%, down from 4.10% last month. The 30-year treasury bond yield ended the month at 3.89%, down from 4.22% last month. We watch bond yields because mortgage rates often follow treasury bond yields.
Mortgage rates – The Freddie Mac Primary Mortgage Survey reported that mortgage rates as of December 1, 2022 for the most popular loan products were as follows: The 30-year fixed mortgage rate was 6.49%, down from 7.08% at the end of October. The 15-year fixed was 5.76%, down from 6.36% last month.
The U.S. economy added 263,000 new jobs in November – The Department of Labor and Statistics reported that 263,000 new jobs were added in November. That was about 100,000 more jobs than analysts expected. The unemployment rate remained at 3.7%, just above the 60-year low of 3.5% in September. The labor-force participation rate (the share of workers with a job or actively looking for a job) was 62.1% in November, down from 62.3% in October. It was at 63.4% before the pandemic. Average hourly wages increased 5.1% from one year ago, which was well above the 4.7% year-over-year increase in October, which the Fed considered too high to curb inflation. This shocked investors and experts who felt that the most aggressive Fed action and interest rate hikes in forty years would have cooled an overheated job’s market by now. There are still about 1.75 open jobs for every worker looking for work. With more demand for workers than the number of available workers, wages will keep rising. Consumer spending makes up about 70% of the U.S economy. With higher wages, and an ample number of jobs for anyone looking for a job, there is no reason to believe that consumers will curb their spending. The Federal Reserve has stated that they intend to keep increasing rates until the overheated jobs market cools to combat inflation.with the jobs market so strong hopes of a pause in Fed interest rate hikes are less likely.
Home sales data is released the third week of the month for the previous month. These are October’s results.
U.S. existing-home sales – The National Association of Realtors reported that existing-home sales totaled 4.43 million units on a seasonally adjusted annualized rate in October, down 5.9% month-over-month from the annualized number of sales in September. Year-over-year sales were down 28.4% from an annualized rate of 6.19 million in October 2021. The median price for a home in the U.S. in September was $379,100, up 6.6% from $355,700 one year ago. October marked a record 128 consecutive months of year-over-year increases in the median price. There was a 3.3-month supply of homes for sale in October, up from a 2.4-month supply last October. First-time buyers accounted for 28% of all sales. Investors and second-home purchases accounted for 16% of all sales. All-cash purchases accounted for 26% of all sales. Foreclosure and short sales accounted for 1% of all sales.
California existing-home sales – The California Association of Realtors reported that existing-home sales totaled 274,040, on a seasonally adjusted annualized basis in October, down 10.4% month-over-month from September, and down 36.9% year-over-year from October 2021, when 434,140 homes sold on an annualized basis. The statewide median price paid for a home in October was $801,190, up 0.3% from $798,440 in October 2021. There was a 3.3-month supply of homes for sale in October, up from a 1.8-month supply one year ago.