Each will provide eight 1-page summaries of articles found in the WSJ during the semester (staple or bind the articles with the papers, not just the internet links). The eight articles should cover each topic below. The summary should include the “who, what, when, and why” the article is important to investors in the financial markets. (i.e. who is involved, what is occurring, when the major issue or any impact expected occur or when it occurred, and why it is important)? For example: Stocks – can be an article on an individual stock or the stock market in general. Banks – can be an article on an individual bank or the banking industry as a whole. Topics covered (8):
1-Interest Rates and/or the Federal Reserve
2-Stocks
3-Bonds
4-Mutual Funds
5-Banks
6-Mortgages and/or Real Estate
7-Insurance and/or Pension Funds
8-Futures Markets
Solution
Home Sales Post Their Sharpest Drop in Three Years
The article shows how real estate prices have been raised causing the sales in US homes to decline substantially. The Wall Street Journal reports that the annual sales of the homes in the US have declined. The decline is being considered as the sharpest annual drop in the last three years. It has been credited to lower inventories and also to higher mortgage interest rates and prices.
The home sales market is not creating many sales as the existing holders after looking at the high prices do not want to sell their investments in expectation of more appraisals. As per the article published in the wall street journal, the investors are looking at the hot markets and are not willing to give up their high-priced homes for getting into a market which feels like 2004. The sales this year in January, as compared to the last year dropped 4.8%. The drop in the sales has been surprising for the market as the analysts were predicting a rise in the home sales in the past month of December as well. In December, however, the market witnessed a decline in the home sales.
It was also surprising because the pending home sales had appreciated in the last two months. It as per the analysts reflects upon the buyers who have experienced the rate shock and thus are unable to close the deals. Moreover, not only the home sales have declined, the ones who are being sold are going for a higher price than the asking price. The effects of the rise in the home prices have raised the affordability barrier by 30%. The rapid increase in prices has affected the households to spend almost 75% of their income to spend on affording a home.
Analysts believe that they still expect that demographic and the job market will overcome this rise in the mortgage rates causing the rise in home sales. However, they do not expect the same past trend in the home sales (Kusisto and Chaney).
Work Cited
Kusisto, Laura and Sarah Chaney. “Home Sales Post Their Sharpest Drop in Three Years.” The Wall Street Journal. The Wall Street Journal, 21 February 2018. Web. 22 February 2018. https://www.wsj.com/articles/u-s-existing-home-sales-slumped-in-january-1519225560.
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