The markets are shifting quickly, and staying informed is more important than ever. From housing and mortgage rates to inflation and investment trends, this week’s briefing gives you a clear look at what’s moving markets and how it affects buyers, sellers, and investors alike.
Government Shutdown: How Long Will It Last?
The U.S. government shutdown continues to create uncertainty, though former White House economic advisor Kevin Hassett predicts it could end this week. If it lingers, federal services, travel, and reporting for housing-related transactions could be delayed, potentially creating headaches for buyers and sellers. Even a short-term shutdown can ripple through the economy, slowing down approvals, permits, and other processes that support real estate activity. Staying alert to developments and understanding the timing of federal operations can give buyers and sellers a competitive edge.
Mortgage Rates: Where Are They Heading?
Mortgage rates remain historically elevated compared to the lows seen in recent years, but the forecasts suggest stability rather than drastic swings. Mike Fratantoni of the Mortgage Bankers Association projects rates will stay between six and six-and-a-half percent through the end of 2028, with three Federal Reserve rate cuts expected in the coming years. Wells Fargo echoes this view, forecasting a 30-year mortgage rate of 6.23% in 2026 and 6.30% in 2027. These numbers underline that inflation is not yet under control, which keeps pressure on mortgage rates. For buyers, this environment means preparing ahead and locking in favorable rates when the opportunity arises, as rapid drops are unlikely in the near term.
Housing Market and Demand
Despite high rates, demand for homes shows signs of life. Fratantoni predicts home sales to climb from 4.8 million this year to 5 million next year, driven by pent-up demand. Many buyers are pre-approved but not yet writing offers, which signals that rate reductions could spark a surge in activity if they occur. Inventory varies dramatically by region, with suburban markets often tight while larger metros may have more options. For sellers, understanding local conditions is crucial, and for buyers, patience combined with strategic timing could pay off in a market where demand and supply are not evenly matched.
Jobs and Economic Shifts
The labor market is also shaping the housing landscape. As federal employees take buyouts, unemployment and jobless claims may tick up slightly, potentially supporting bond prices and lowering mortgage rates. Trends in automation and AI are contributing to efficiency but may lead to more layoffs in some sectors. Economic uncertainty, including the potential for job instability, can make buyers hesitant to commit to major purchases. Monitoring employment data alongside mortgage trends gives both buyers and sellers insight into timing and market sentiment.
Inflation and CPI Data
Inflation continues to be a major driver of mortgage rates and bond markets. The upcoming September CPI report is expected to show headline inflation of around 0.3 to 0.4 percent month-over-month, with year-over-year figures near 3 percent. Core CPI, which excludes food and energy, is projected around 3.1 percent. Shelter costs, which drove the August increase, will be a key factor to watch. If these costs moderate in September, mortgage rates could dip below six percent, providing a boost to buyer activity and easing pressure on housing affordability.
Key Market Movers This Week
Several data releases will shape the markets in the coming days. Thursday brings September existing home sales, which reflect both demand and inventory levels. Strong sales may indicate resilient buyer activity and could slightly increase mortgage rates, while weaker sales could signal slower economic activity and ease borrowing costs. Friday’s CPI report is the most important economic release of the week. Hotter-than-expected inflation would likely push the Fed to maintain a restrictive stance, raising Treasury yields and mortgage rates. Conversely, a softer CPI could lower rates and provide relief to homebuyers. Also on Friday, the Services PMI will shed light on economic strength and labor demand. Strong readings could put upward pressure on rates, while weaker figures may support modest declines. Collectively, these reports are likely to drive volatility in bond yields and mortgage rates ahead of the next Federal Reserve meeting.
Investing and the Dollar
Long-term trends underscore the importance of investing to protect wealth. Inflation has eroded about half of the U.S. dollar’s purchasing power over the past 30 years, while inflation-adjusted stocks, particularly the S&P 500, have grown by roughly 888 percent over the same period, averaging about eight percent per year. While the stock market has soared this year, with the S&P 500 up 40 percent from April lows and near all-time highs, concentration risk is high, with Nvidia, Microsoft, and Apple making up over 21 percent of the index. International stocks and small caps have seen stronger performance recently. Investors and homeowners alike should view diversification and strategic planning as essential tools to protect wealth and navigate market volatility.
Bonds, the Fed, and Mortgage Implications
Bond markets have rallied in anticipation of Federal Reserve rate cuts, but core inflation remains above target. Weak job reports or slowing growth could accelerate cuts, which would be favorable for mortgage rates. After a long stretch of declines, all major bond categories are now positive, with emerging markets leading gains. Buyers and sellers should watch inflation and employment data closely, as these metrics heavily influence Fed decisions and, by extension, mortgage pricing. Lower rates could boost housing affordability, but only if inflation remains under control.
Real Estate and Housing Trends
Housing affordability remains historically challenging. The median income needed to purchase a median-priced home has risen to about $124,000, far above the current median income of $79,000. Sellers now outnumber buyers by more than 500,000, the largest gap on record. While U.S. home prices have risen by less than two percent over the past year, renting is still cheaper than buying in most major metros. These trends suggest that buyers have leverage and sellers need realistic pricing. For realtors, local market insight, timing, and financing guidance are more important than ever.
Commodities, Crypto, and Investor Sentiment
Precious metals and cryptocurrencies have surged as investors seek stores of value amid inflation concerns. While these markets don’t directly affect local housing, they do shape overall investor sentiment. The strength in gold, silver, and Bitcoin reflects a broader awareness of monetary risks and the desire for assets that maintain purchasing power over time.
Negotiation Opportunities for Buyers
September saw some of the largest home-sale discounts since 2019. The typical home sold for about 1.4 percent below list price and spent 50 days on the market, the slowest pace for a September in nearly a decade. Competition has eased, with only 25 percent of homes selling above list price. Mortgage rates are hovering near 6.17 percent, giving buyers more purchasing power than a year ago. While pending home sales have slipped, the gap between sellers and buyers, combined with lower monthly payments, makes this a favorable time for those ready to act. Sellers who price realistically and offer concessions can still succeed, but patience, timing, and market knowledge are crucial.
Bottom Line
For buyers, purchasing a home is about stability, equity, and long-term financial planning. For sellers, understanding market conditions and being flexible with pricing and concessions is essential. Inflation, mortgage rates, employment trends, and local market dynamics are the main drivers of housing decisions. Staying informed and strategic is the key to success in today’s market. Investing wisely, understanding the timing of purchases or sales, and monitoring economic signals can provide both security and opportunity in an unpredictable environment.