Weekly Economic Recap 9.28-10.4 2026

Weekly Economic Recap: September 28 – October 4, 2026

Mortgage rates climbed to 7.30%, their highest since late 2023, and buyers kept pulling back, even as layoffs stayed near record lows and the economy kept growing.

Housing

MBA 30-Year Mortgage Rate: The average 30-year fixed rate rose 18 basis points to 7.30% for the week ending September 25, the highest since late November 2023. Rates are up more than 120 basis points since the US-Israeli strikes on Iran began in late February, as Treasury yields climb on energy-driven inflation, a resilient economy, and hawkish Fed signals. Markets now expect at least one more Fed hike by year-end.

Mortgage Applications: Applications fell 6% for a fourth straight weekly decline. Refinancing dropped about 9% (government-backed refis down 13%) and purchase applications fell 4%. Adjustable-rate mortgages, priced roughly 80 basis points below fixed loans, made up 10.3% of applications, the highest share since October 2025.

FHFA House Price Index: Prices rose 0.3% month-over-month in July, beating the 0.1% forecast and up from no change in June. Year-over-year, prices climbed 2.6%, the fastest annual pace in nearly a year, though still well below the long-run average of 4.48%. Results varied by region: the Mountain division fell 0.8% for the month while the Middle Atlantic gained 1.5%.

Growth and Inflation

GDP Growth Rate: The economy grew at an annualized 2.2% in Q2, revised up 0.7 percentage point from the prior estimate, following an upwardly revised 2.5% in Q1. Nonresidential construction, especially data centers, contributed the most, and real estate and rental and leasing was among the leading industries.

Core PCE Price Index: The Fed's preferred inflation gauge rose 0.2% in August, below the 0.3% expected, after July was revised down to 0.1%. The annual rate came in at 3.0%, under the 3.3% forecast. The data suggest some moderation, but inflation remains well above the Fed's 2% target.

Personal Income & Spending: Personal income rose 0.2% in August, missing the 0.4% forecast, while spending jumped 0.9%, the biggest gain since March. Inflation-adjusted spending rose 0.6% and real disposable income was flat, meaning consumers are spending faster than their incomes are growing.

Labor Market

Jobless Claims: Initial claims fell to 197,000, beating the 200,000 forecast and sitting near the 57-year low of 189,000 set in mid-July. Continuing claims dropped to 1.701 million, the lowest since April 2023, and the 4-week average fell to 200,000, far below the long-run average of 359,000. Economists point to strong corporate profits and resilient demand, though employers remain cautious amid high energy costs, the Iran conflict, possible Fed hikes, and unsettled trade policy.

JOLTS Job Openings: Openings fell by 256,000 to 7.079 million in August, the lowest in five months and below the 7.23 million forecast. Declines were led by health care, professional and business services, manufacturing, construction, and real estate. Quits held at 3.07 million, a 1.9% rate that remains near its lowest since 2020, reflecting continued worker reluctance to leave their jobs.

Unemployment Rate: The rate rose to 4.2% in September from 4.1%, slightly above expectations. The number of unemployed grew by 78,000 to 7.11 million, but total employment jumped by 406,000 and participation rose to 61.8% from 61.6%. The broader U-6 rate eased to 7.6% from 7.7%.

Average Hourly Earnings: Pay rose 0.1% to $37.81 in September, below the 0.3% expected and slower than August's 0.3% gain. Over the past year wages are up 3.0%, the weakest pace since May 2021, roughly the same pace as core inflation.

The Bottom Line

The economy is growing, layoffs are rare, and inflation is easing slightly, but mortgage rates above 7% are weighing on housing activity. With the Fed signaling it may not be done and wage growth slowing, relief on rates doesn't look close. Buyers should get pre-approved early, compare fixed and adjustable options carefully, and focus on the monthly payment rather than the headline price. Sellers and investors should price realistically and underwrite deals with today's financing costs, not last year's.