Dear Valued Friends & Clients,
As we reach the end of May 2024, I wanted to provide you with an economic update to help you navigate the current real estate market. It's been an eventful month for the economy, with significant movements in stocks, bond yields, and mortgage rates. Here are some key highlights and insights to keep in mind:
- Jobs and Inflation: Early in the month, a jobs report indicated a slowdown in hiring, a positive sign after the robust job market earlier this year. The Consumer Price Index (CPI) showed a year-over-year increase of 3.4% in April, slightly down from 3.5% in March. This suggests that inflation may be moderating again.
- Stock Market Performance: The first half of May saw the Dow Jones Industrial Average break 40,000 for the first time, and the NASDAQ reached an all-time high. However, concerns about inflation persisted, and the Federal Reserve’s Beige Book indicated that inflation might not be decreasing as expected. This caused stock markets to retreat from their earlier highs.
- Bond Yields and Mortgage Rates: The 10-year Treasury bond yield closed at 4.51%, down from 4.69% last month, and the 30-year Treasury bond yield ended at 4.65%, down from 4.79%. Mortgage rates also saw a slight decline, with the 30-year fixed mortgage rate dropping to 7.03% from 7.17% and the 15-year fixed rate to 6.36% from 6.44%.
- Personal Consumption Expenditures (PCE): The PCE index showed a 2.7% year-over-year increase in April, aligning with expectations and indicating a slowdown in inflation. This helped stabilize stock markets and brought some relief to bond yields and mortgage rates.
- Existing-Home Sales: The National Association of Realtors reported that existing home sales in April totaled 4.14 million units on a seasonally adjusted annualized rate, down from 4.22 million in April 2023. The median home price was $407,600, up 5.7% from last April. Inventory levels have increased slightly to a 3.5-month supply.
- Market Composition: First-time buyers made up 33% of all sales, while investors and second-home buyers accounted for 16%. All-cash purchases represented 28%, and foreclosures and short sales remained low at 2%.
- Home Sales and Prices: The California Association of Realtors reported that existing home sales reached an annualized rate of 275,540 units in April, a 3% increase from March and a 4.4% rise from April 2023. The median home price surged to $904,210, up 11.4% year-over-year.
- Inventory: There was a 2.6-month supply of homes in April, up from 2.5 months a year ago.
- For Sellers: Now is an opportune time to sell your home. The market remains strong with rising home prices and a healthy demand from buyers, including a significant number of first-time buyers and investors.
- For Buyers: Despite the recent economic fluctuations, mortgage rates have slightly decreased, and a growing inventory provides more options. This is a good time to buy a home for you and your family, taking advantage of the current market conditions.
As always, I am here to provide guidance and support in your real estate journey. Whether you're looking to buy or sell, feel free to reach out to me as your trusted real estate advisor.
Tina Lucarelli - Global Real Estate Advisor
