Editor’s note: Econ Review is a roundup of the housing and economic market data reports released during the month.
Typically, the real estate industry enters a slower period as the end of the year approaches. The cold seasons bring a deceleration in sales and other activity, and September ushers in the transition period between the end of summer and beginning of fall.
Let’s take a look at how the housing and economic data reports released last month shaped up:
Home sales
The typical fall slowdown of home sales is starting to take effect as existing-home sales dipped 2% month-over-month and 1.2% year-over-year.
This was unfortunately the third consecutive month of declines in sales, and was described by Realtor.com® Chief Economist Danielle Hale as a “new 2026-low.”
Despite this, National Association of Realtors® Chief Economist Lawrence Yun said that homebuyers have remained “resilient” and are “not falling apart from the rising mortgage rate condition”—though rates are up another 30 basis points since he made those comments.
Sellers are still coming to the market, as inventory on the market grew 3.2% month-over-month and 5.9% year-over-year. The current supply rate of 4.9 months is actually nearing the November 2015 high of 5.1 months, as noted by Hale.
New-home sales—which have been facing extra challenges due to continued hurdles in the housing construction industry—actually took a surprising turn this month. Sales jumped 6.4%, only 2% down from last year.
Realtor.com Senior Economist Joel Berner labeled this increase an “encouraging (sign) for the new home market,” as affordability issues have kept new-home sales muted throughout the year so far.
As for potential activity ahead, pending home sales data was virtually flat this month, up only 0.3% month-over-month, and down 4.7% year-over-year.
Bright MLS Chief Economist Lisa Sturtevant speculated that the slowdown “is likely just a foreshadowing of a much slower housing market this fall.”
She noted that the August rate hike from the Federal Reserve “virtually guarantees that mortgage rates will remain at or above 7%, creating a psychological and financial barrier that will sideline even more prospective buyers in the coming months.”
Home prices
Home prices have again continued their typical trend of annual growth, but the growth rate continues to decelerate as the latest Case-Shiller index saw home values decline for the 14th consecutive month.
Home prices as measured by the index were up 1.6% month-over-month and 1.9% year-over-year, but inflation has continued to outpace this growth once again.
Notably, Rebecca Kaufman—associate director of commodities at S&P Dow Jones Indices—pointed out that the non-seasonally adjusted national and city composite indices saw “monthly gains smaller than their seasonally adjusted counterparts,” which she explained “suggests seasonal factors weighed heavily on home prices in July.”
The question at large is more so about affordability, which has continued to improve this month as NAR’s Housing Affordability Index clocked in at 104.7, up from 101.2 last year. Affordability across all regions improved in the index, with the West and South having the greatest increase by 5.9% and 4.5%, respectively.
Housing construction
As previously mentioned, housing construction has faced its own particular set of challenges due to supply chain issues stemming from tariffs. The latest New Residential Construction data again reflected these issues, as starts, building permits and completions all declined.
Despite the 2.7% month-over-month dip in housing starts, they were on a positive trend year-over-year, up 3.5%.
Additionally, single-family starts alone were up 7.6% month-over-month, a surprising divergence as typically multifamily has performed better in this challenged market.
Cotality Chief Economist Selma Hepp said that homebuilders are “chugging” along while they face “the ‘perfect storm’ of rising costs, labor shortages due to immigration issues, and the potential crowding out of residential construction by data centers.”
She also noted that the future looks to remain complicated for the construction industry, as forecasts for housing starts have been downwardly revised and “are now projected to decline 2% in 2026 and 4% in 2027.”
In line with the challenged market, builder confidence was once again reported in the negative territory, dipping three points to 32 and staying firmly below the 50-point breakeven mark.
National Association of Home Builders (NAHB) Chief Economist Robert Dietz specifically called out that this month’s reading was the “lowest level since September 2025, as tight lending conditions and elevated land, labor and construction costs persist.”
“Persistent labor shortages” was a concern voiced by NAHB Chairman Bill Owens, with builders in some markets reporting that “increased immigration enforcement is discouraging legal workers from reporting to job sites.”
The overall economy
The labor market rebounded in September, according to jobs data, beating out expectations from economists and spreading a little positivity across the economy. The U.S. added 162,000 jobs in August, and the unemployment rate remained unchanged at 4.1%.
Mike Fratantoni—SVP and chief economist of the Mortgage Bankers Association—stated that the labor market remains “low-hire/low-fire,” but overall this report “confirms that the job market is resilient.”
But that trend became much less certain as employment data missed projections this month, according to the latest report from October, with the addition of a measly 29,000 jobs. Unemployment currently sits at 4.2%, not a dramatic increase from its previous 4.1% rate, but the jobs report did come with several downward revisions to previous months’ data, revealing that the labor market may not be as resilient as once thought.
Realtor.com Senior Economist Jake Krimmel expressed his disappointment with the latest jobs report.
“Today’s September jobs report was a clear miss, throwing some cold water on the labor market recovery we had hoped for. Payrolls rose by just 29,000, far short of the 84,000 consensus and the 100,000 that prediction markets gave a 50/50 chance of topping,” he said.
Unfortunately, the Fed’s attention has been more focused on inflation as of late, and Krimmel outlined that a positive jobs report, while nice for buyers and sellers in the housing market, would not necessarily affect the course of the FOMC meeting.
As for inflation, prices remain elevated as the Iran War continues to have a strong downstream effect, keeping gas and energy costs on the rise.
The latest Consumer Price Index (CPI) reflected this, with annual inflation clocking in at 3.4% and annual core inflation at 2.4% after both observed monthly rises.
Krimmel stated that regardless of how inflation affected the Fed’s decision, “households and the housing market need a path toward lower inflation—for purchasing power, consumer confidence, and lower mortgage rates next year.”
The latest Personal Consumption Expenditures (PCE) price index for inflation echoed a similar sentiment, as it also reported that annual inflation sits at 3.4%. On a monthly basis, the Bureau of Economic Analysis reported that inflation grew slightly to 0.3%, causing concern among economists.
As previously mentioned, and as foreshadowed by inflation data, the Fed made the choice to hike interest rates by a quarter point at their latest meeting.
Fed Chair Kevin Warsh laid the FOMC’s opinion out plainly: “inflation is too high, and has been for too long. This summer’s inflation readings do not tell me that underlying trends have meaningfully improved.”
Notably, further interest rate hikes may be on the horizon if the inflation situation continues to see no improvement, as some Fed members stated recently in speeches.
With the economy still in a rough spot, the consumer outlook remains rather dour.
Consumer sentiment and confidence were both down this month as outlooks on inflation and business conditions continued to deteriorate in the face of the prolonged conflict with Iran.
As for future indicators, the Leading Economic Index went in a negative direction for the first time in six months. The index dipped 0.1%, coming in at 99.5 points (below the 100 point baseline of 2016’s economy).
Justyna Zabinska-La Monica—the senior manager of Business Cycle Indicators at The Conference Board—noted that four out of 10 components of the index decreased in August, with “consumer expectations remaining a significant strain on the Index.”
She also noted that with the LEI declining, the index’s “six-month growth rate turned back to slightly negative, suggesting a less certain economic environment ahead.”
“The economy is still expanding, but growth is expected to slow,” she concluded. “The Conference Board forecasts real GDP to increase at a 1.9% rate in 2026, with our outlook for 2027 downwardly revised from 1.9% to 1.8%.”
