For the week of OCTOBER 27, 2025

“Have you ever noticed that anybody driving slower than you is an idiot, and anyone going faster than you is a maniac?”—George Carlin, American stand-up comedian, actor, and author 

Existing Home Sales grew 1.5% in September as the median price declined and affordability improved. Inventory is 14% ahead of a year ago, pushing the supply closer to the 5-month benchmark of a normal market.

Buyer demand is increasing, with the Mortgage Bankers Association reporting 11 straight weeks of double-digit year-over-year growth in purchase mortgage applications, with last week coming in 20% ahead of last year.

The government shutdown delayed the September New Home Sales report, but the Zonda New Home Market Update posted that sales rose 3.1% in September, and were essentially flat (up 0.6%) from a year ago.

COOL INFLATION, HOT STOCKS... Investors believed a cooler than expected inflation read signaled two more Fed rate cuts to close out the year, and solidly sent the three major stock indexes to new record highs.

Delayed by the government shutdown, the September Consumer Price Index (CPI), posted a modest 0.3% monthly gain, allowing the Fed to go ahead with another rate cut this week to help boost a weakening labor market.

All was not copacetic, as October University of Michigan Consumer Sentiment remained pressured by inflation expectations that have yet to materialize. Traders focused instead on signs of progress in U.S.-China trade talks.

The week ended with the Dow UP 2.2%, to 47,207; the S&P 500 UP 1.9%, to 6,792; and the Nasdaq UP 2.3%, to 23,205.

Overall, bond prices inched up, but the 30-Year UMBS 5.0% slipped 31 basis points, to 99.73. Freddie Mac’s weekly survey reported the national average 30-year fixed mortgage rate fell another 8 basis points to the “lowest level in over a year.”  Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information. 

DID YOU KNOW… The latest America at Home Study found 50% of respondents said they would now consider a rent-to-own arrangement to achieve homeownership, up substantially from 33% in the prior study.

HOME PRICES AND PENDING SALES, INFLATION, THE FED... The August Case-Shjller Home Price Index is expected to continue to show a modest uptick. Pending Home Sales should reveal another increase in signed contracts on existing homes in September. The forecast for September PCE Prices is for inflation to remain moderate, though still above the Fed's 2% target. But the FOMC Rate Decision is still for the rate to drop another quarter percent to help stimulate a softening labor market.

Forecasting Federal Reserve policy changes in coming months. The futures market is almost totally certain we'll see quarter percent rate cuts at the next two Fed meets, with a small majority expecting another cut in January. Note: In the lower chart, the 98.3% probability of change means there's only a 1.7% probability the rate will stay the same. Current rate is 4.00%-4.25%.

Probability of change from current policy:

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