California housing market holds steady in October: While low mortgage rates have reduced borrowing costs and aided affordability, the continued lack of inventory combined with a still strong demand for housing has resulted in yet another price surge.

The statewide median home price was $605,280, down 0.1 percent from the month prior, but up 6 percent form a year ago, and sales meanwhile remained above 400,000 on a seasonally adjusted annualized rate for the fourth month in a row. Sales in October were up 0.1 percent from September and 1.9 percent from October of last year.

Sales of existing homes nationally rebounded 1.9 percent in October: Consistent with the California story, sales of previously owned homes rose as low mortgage rates continue to provide a lift. However, housing supply remained on a declining trend and continue to put upward pressure on home prices in recent months.

As such, the national median sales price jumped another 6.2 percent to $270,900 on a year-over-year basis.

Macro economy

California’s labor market persists in October: Despite housing affordability challenges and headwinds from a global and national economic slowdown, the labor market  in the Golden State remains solid in October. For instance, 23,600 new nonfarm jobs were added to the labor market while payroll improved at a pace faster than even nationwide by 1.8 percent, and the unemployment rate fell to 3.9 percent, the lowest on record.

Small-business optimism rose in October: Small-business owners’ confidence in the U.S. economy perked up 0.6 points to a reading of 102.4 as 8 out of the 10 components in the index advanced to begin the last quarter of the year.

While small-business owners were more optimistic and less uncertain about the economy than the prior month, the index measuring uncertainty remains historically high as we head into an election year. Nevertheless, they continued to create jobs, raise wages and grow their business.

U.S. budget deficit jumped 34 percent in October: The federal government’s budget deficit rose $134.5 billion over last year, putting the U.S. on course to top the $1 trillion mark in the 2020 fiscal year for the first time in eight years.

With the government spending increasing 8 percent, federal outlays for defense, education, health and Social Security also rose significantly, while the amount of tax receipts dipped 3 percent. Rising deficits typically lead to higher interest rates over time, but we have yet to see that connection this time around.

Jobless claims stick to five-month high of 227,000: While the number of people who applied for unemployment benefits clung to the highest level in the last five months, the surge is not likely a signal of a shift in the labor market, as evidence of pronounced increase in layoffs is still lacking.

Real estate finance

Mortgage rates fall back: The 30-year fixed-rate mortgage (FRM) decreased from 3.75 percent the week prior to 3.66 percent to start second half of November. The FRM is nearly 115 basis points lower than the average of 4.81 percent recorded a year ago.

Mortgage applications wane from a week earlier: Mortgage applications decreased 2.2 percent from the week prior even as mortgage rates declined. The refinance index decreased 8 percent from the week prior although it was still 152 percent higher than a year ago. New purchase applications increased 7 percent from both last week and the same week of last year.

With rates substantially lower than what they were at the end of 2018, we should continue to see year-over-year gains in both purchase and refinance applications in the upcoming weeks.

Mortgage delinquencies fall to lowest level in nearly 25 years: The number of mortgage loans for single-family homes in a delinquent state decreased to 3.97 percent of all loans outstanding at the end of the third quarter of 2019. As the U.S. economy continues to have a healthy labor market and slow but steady economic growth, delinquency rates should remain low in months to come.

Refinances hit four-year high in October: The refinancing share of overall closed loans grew to 51 percent in October. This was the first time in four years that the mortgage business had less than half of all loans originated in a month as purchase loans.

— Thomas Schultheis is with Berkshire Hathaway HomeServices California Properties, and can be reached at 805.729.2802 or