For the week of SEPTEMBER 2, 2025

“Two things are infinite: the universe and human stupidity; and I'm not sure about the universe.”—Albert Einstein, German-born American theoretical physicist

The Pending Home Sales measure of signed contracts on existing homes posted a small annual gain in July, which the National Association of Realtors (NAR) put to “modest improvements in housing affordability and inventory.”

New Home Sales saw a small decline in July, but prices are also declining, with sale prices down almost 6% the past year and down over 12% since their 2022 peak, as more builders cut prices and offer buyer incentives.

The closely followed Case-Shiller index reported home prices grew in June at the slowest rate in two years. Analysts called this historically significant, as home prices failed to keep pace with overall inflation for the first time in years.

A HOT FOUR MONTHS... August ended with the Dow and the S&P 500 booking four straight months of gains, and the Nasdaq five, although the three major indexes slipped for the week on Friday's sticky inflation report.

Overall PCE Prices held inflation at a 2.6% annual rate in July—no drop, but no increase either. Inflation hasn't accelerated since tariffs, though consumers still worry, according to the University of Michigan Consumer Sentiment survey. 

Yet personal incomes and spending were both up nicely from a year ago, and core capital goods shipments showed business investment rose robustly in July. Plus, Q2 GDP had the U.S. economy growing at a 3.3% annual rate.

The week ended with the Dow down 0.2%, to 45,545; the S&P 500 down 0.1%, to 6,460; and the Nasdaq down 0.2%, to 21,456.

Bonds ended up a tick overall, while the 30-Year UMBS 5.5% surged 0.87, to 100.18. In Freddie Mac’s Primary Mortgage Market Survey, the national average 30-year fixed mortgage rate ticked down to a new 10-month low. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.    

DID YOU KNOW… A national real estate database reports that even with a slight decline in the number of sellers nationally, there are still about 36% more sellers than buyers, the biggest difference in 12 years.

CONSTRUCTION SPENDING, MORTGAGE APPLICATIONS, JOBS... July Construction Spending is forecast to increase overall, but we'll focus on the residential part. We'll also keep track of the MBA Mortgage Applications Index to see if the recent upward trend in purchase applications continues. The August jobs report is expected to show a modest monthly gain in new Nonfarm Payrolls, a solid gain for Average Hourly Earnings, and a slight uptick in the Unemployment Rate.

Forecasting Federal Reserve policy changes in coming months. Expecting a modest August jobs report, Fed watchers see a rate cut this month, but a hold in October before another cut in December. Note: In the lower chart, the 86.4% probability of change means there's only a 13.6% probability the rate will stay the same. Current rate is 4.25%-4.50%.

Probability of change from current policy:

A clear vision for your business tells you where you’re going and keeps you focused. But making that vision a reality requires a strong business plan that defines the short- and long-term goals, and the strategies and tactics you’ll use to reach them.