Housing affordability drops to a 10-year low in the second quarter – The California Association of Realtors reported that only 26% of California households could afford to purchase a median priced home in California. That was down sharply from 31% in the first quarter of 2018. It was also down from 29% in the second quarter of 2017. Rising home prices, higher interest rates and stagnant incomes have driven affordable down. For example, home prices in June rose over 8% while wages grew just 2.7% from one year earlier. Interest rates were no higher in the second quarter of 2018 than in the first quarter, but were higher than in the second quarter of 2017.
Mortgage rates almost unchanged for the week – The August 9, 2018 Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 4.59%, almost unchanged from 4.60% last week. The 15-year fixed was 4.05%, almost unchanged from 4.08% last week. The 5-year ARM was 3.90%, down slightly from 3.93% last week.
Stocks lower for the week – Stock market indexes posted their first weekly loss since the last week of June. Markets, which were within 1/2% of all time highs last week, after a stellar second quarter earnings season, reacted to a financial crisis in Turkey and an increase in back and forth tariff threats between The U.S. and China. The Dow Jones Industrial Average closed the week at 25,313.14, down from 25,462.08 last week. It is up 2.4% year to date. The S&P 500 closed the week at 2,833.28, down from 2,840.30 last week. It’s up 6.0% year to date. The NASDAQ closed the week at 7,839.12, up from 7,812.01 last week. It’s up 13.6% year to date.
Treasury Bond Yields lower this week – The 10-year treasury bond closed the week yielding 2.87%, down from 2.96% last week. The 30-year treasury bond yield ended the week at 3.03%, down from 3.09% last week. Mortgage rates follow bond yields. I’d expect next weeks mortgage rates to be slightly lower.