Weekly Economic Recap 10.26-10.30 2026

Weekly Economic Recap: October 26 – October 30, 2026

The Big Picture

Higher mortgage rates continue to weigh on housing. Builder confidence sits at its lowest level since 2012, housing starts and pending home sales have fallen (the latter to a record low), and mortgage applications are at their weakest since January 2025. Meanwhile, the job market remains strong and consumers are still spending, but inflation is running hot. The takeaway for sellers and investors: borrowing costs aren't easing anytime soon, so price realistically and underwrite deals at today's financing costs.

Housing Data: Cooling Construction, Firm Prices

Building Permits slipped. US building permits fell 0.4% in September to a seasonally adjusted annual rate of 1.398 million, the second straight monthly decline and the lowest level since June. High mortgage rates and growing inventories of unsold new homes are weighing on construction. Multifamily permits (5+ units) dropped 0.5% to 552,000, while single-family permits edged up 0.1% to 846,000. Regionally, the West fell sharply (-9.5%) while the Northeast surged (+13.3%).

Case-Shiller Home Price Index: Home prices are still rising year over year. The S&P Cotality Case-Shiller 20-City Index climbed 2.7% year over year in August, its strongest gain since May 2025 and above the 2.5% forecast. Chicago (+6.7%) and New York (+6.2%) led the pack, while Seattle (-2.0%) saw the steepest decline. On a monthly basis, prices slipped 0.4% from July, though inflation-adjusted prices rose 0.3%. Affordability remains a real challenge for buyers.

New Home Sales dipped but beat expectations. Sales of new single-family homes fell 0.6% in September to an annual rate of 676,000, down from August's revised eight-month high but well above the 650,000 forecast. The South (-6.6%) and Midwest (-7.3%) dropped sharply, while the West (+21.4%) and Northeast (+28.0%) jumped. Inventory fell to 476,000 homes, or 8.4 months of supply, and the median price rose to $400,400, a three-month high.

Mortgage Rates: A Small Breather

MBA 30-yr Mortgage Rate: The average 30-year fixed mortgage rate fell to 7.37% in the week ending October 23, its second straight weekly decline. That helped lift mortgage applications 3.4%, with refinancing up 3% and purchases up 4%. Still, rates are more than a full percentage point above a year ago, and many homeowners with older, lower-rate loans have little reason to refinance. With prices still rising, this dip offers buyers only modest relief.

The Fed: Holding Steady, With a Hawkish Edge

Fed Interest Rate Decision: The Federal Reserve held the federal funds rate at 3.75%–4.00% at its October meeting, following September's 25 basis point hike, the first increase since 2023. The hold was expected, but two policymakers voted for another 25 basis point hike. The Fed described economic activity as expanding at a strong pace with resilient spending and little change in unemployment, but noted that inflation remains elevated. Chair Warsh also announced that, starting in 2027, the Fed will reduce the number of meetings at which members vote on rates.

Inflation: Energy Is Driving It Higher

PCE Inflation: Headline PCE rose 0.5% in September, the most in six months, pushing the annual rate up to 3.6% from 3.4%. Goods prices jumped 0.8%, led by a 9.2% surge in gasoline and other energy prices, while services inflation held at 0.3%. Core PCE, the Fed's preferred gauge, rose 0.3% (3.1% year over year), its highest annual reading since May. Inflation has now been above the Fed's 2% target since 2021, and rising energy costs appear to be feeding into broader prices.

Consumers: Still Spending, But Stretched

Personal Spending rose 0.5% in September, slowing from August's 0.9% gain. Personal income and disposable income each rose just 0.2%, so spending is once again outpacing income growth. After adjusting for inflation, spending was flat for the month, with goods spending down 0.3% (motor vehicles and parts fell 2.0%) and services up 0.2%. Over the full third quarter, real consumer spending grew at an annualized 3.8%, unchanged from the second quarter and above the long-run average of about 3.3%.

The Labor Market: Resilient

Jobless Claims: The jobs picture remains solid. Initial jobless claims fell by 1,000 to 194,000 for the week ending October 24, beating the 199,000 forecast. The four-week average slipped to 196,750, and continuing claims dropped by 21,000 to 1.701 million, the lowest since early 2023.

ADP Employment Change: One soft spot — ADP reports private employers added an average of 16,750 jobs per week over the four weeks ending October 10, down from 17,500 the prior period, the second straight slowdown in hiring.

What It Means for Sellers and Investors

Price to the market, not to last year: with buyers squeezed by 7%+ mortgage rates, overpriced listings will sit. Underwrite deals at today's financing costs, since a Fed leaning toward another hike means no rate relief should be baked into your numbers. Keep an eye on regional divergence too, as Chicago and New York are showing strength while Seattle and parts of the West are softer, so local conditions matter more than national headlines. Strong employment supports demand, but affordability and rising inventory cap how fast prices can climb, so expect a slow-burn market.