For the week of SEPTEMBER 15, 2025

“Just remember, once you’re over the hill you begin to pick up speed.”—Charles M. Schulz, American cartoonist, creator of the Peanuts comic strip

The Mortgage Bankers Association reported demand for purchase mortgages surged last week to the highest level since July, 23% ahead of a year ago—the strongest year-over-year growth rate in over four years.

Realtor.com noted that both the median listing price and price per square foot fell annually last week—the first drop in listing prices since the spring, and in price per square foot in two years, as sellers adjust expectations.

Realtor's Chief Economist said that “the national housing market is now more balanced between homebuyers and sellers at five months of supply,” although “local conditions…are what matter most” for buyers and sellers.

FED GUESSING... With the economic data hinting at Fed rate cuts through the end of the year, traders sent the Dow to its first win in three weeks, and the S&P 500 and the Nasdaq to their best weekly performances since August.

CPI inflation edged a touch higher in August, but weekly initial jobless claims spiked to their highest level in almost four years, bolstering traders' expectations that the Fed would cut rates to help a weakening labor market. 

Yet PPI wholesale price inflation fell in August, indicating a future drop in consumer prices. Plus, the index of Small Business Optimism rose nicely, and the Treasury deficit benefited from increased tariff revenues.

The week ended with the Dow UP 1.0%, to 45,834; the S&P 500 UP 1.6%, to 6,584; and the Nasdaq UP 2.0%, to 22,141.

Bonds edged ahead overall, the 30-Year UMBS 5.5% UP 81 basis points, to 101.06. Freddie Mac’s Primary Mortgage Market Survey reported the national average 30-year fixed mortgage rate “fell 15 basis points…the largest weekly drop in the past year.” Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.

DID YOU KNOW… Zillow found the total value of the U.S. housing market reached a record high $55.1 trillion in June, $20 trillion higher than before the pandemic. But growth has slowed to less than a 2% gain the past year.

HOME BUILDING, RETAIL SALES, THE FED... Home construction activity in August is expected to recede a trifle in the Housing Starts report, although the forecast is for builders to log a rise in Building Permits. Economists predict August Retail Sales will show a continuing, though smaller, gain in consumer spending. The forecast is for the Fed's FOMC Rate Decision to be a quarter percent rate cut.

Forecasting Federal Reserve policy changes in coming months. The slight gain in August CPI inflation hasn't changed the futures market's expectation of three quarter point rate cuts starting this Wednesday. Note: In the lower chart, the 96.4% probability of change means there's a 3.6% probability the rate will stay the same. Current rate is 4.25%-4.50%.

Probability of change from current policy:

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