A trade war twist, plus a 2020 housing prediction
This week President Trump threw a curveball at the trade war with China, saying that he thinks it's actually "better to wait until after the election" to come to a deal. That sent some waves through the market causing the Dow to drop 450 points Tuesday.
The constant back and forth about when a trade deal will get done continues to cause volatility in the markets and the benchmark 10-year Treasury note yield. Tuesday's yield dropped from 1.85% to 1.72% and then went back up, starting trading Friday at 1.797%.
Interest rates continue to hold low and steady this week with the Freddie Mac 30-year fixed-rate average sitting at 3.68%. Remember, this is an average and does not necessarily reflect the interest rate you will qualify for. Freddie Mac expects mortgage rates to stay that low, if not lower, throughout 2019 and well into 2021! The group's latest housing market forecast predicts mortgage rates will hover around 3.8% on average all the way through 2021.
The November jobs report from the Bureau of Labor Statistics dropped on Friday morning with an eye-popping 266,000 jobs added in November. That is a huge positive going into the end of the year. Year-over-year, wages also rose by 3.1% with the unemployment dropping back down to 3.5%.
ADP's private payroll report this week showed that private-sector employment slowed sharply with job growth increasing by just 67,000. In contrast, economists expected a gain of 156,000. This is the smallest increase since May.
The housing industry got a boost this week with some positive sentiment from homebuilders. According to a forecast from the National Association of Realtors, single-family housing starts will hit a 13-year high in 2020 with roughly 1 million starts.
The NAR's chief economist, Lawrence Yun, is also predicting that the median price on a new home in the United States will drop by 4% to $313,500 this year and have only slight appreciation in 2020. He expects existing home prices to appreciate at a rate of 4.3% and 3.6% in 2019 and 2020, respectively.
One thing to keep an eye on is gas prices. Friday afternoon, members of OPEC and non-alliance members, like Russia, agreed to cut oil production by an additional 500,000 barrels per day through March 2020. That brings the total cuts to 1.7 million barrels per day. Another meeting is scheduled for early March for OPEC+ to review its policy.
