The Mortgage Economic Review is a monthly summary of Key Economic Indicators, Data, and Events pertinent to Mortgage, Housing, and Finance Professionals.

 

AT A GLANCE – Key Economic Events and Data released during September 2025

• Interest Rates: The 10-year Treasury yield fell to 4.15% (Sep 30) from 4.23% (Aug 29).
• Housing: Existing Home Sales fell 0.2% (+1.8% YoY), New Home Sales rose 20.5% (+15.4% YoY), and Home Prices are up 1.8% – 2.3% YoY.
• Labor: The US Economy created 22,000 New Jobs during August and 79,000 in July. The Unemployment Rate rose to 4.3% in August. Wages are growing at 3.7% YoY.
• Inflation: CPI rose 0.4% in August (+2.9% YoY), and PCE rose 0.3% (+2.7% YoY).
• The Economy: US GDP grew at a 3.8% annualized rate in 2Q2025 (+ 2.1% YoY).
• Consumers: Retail Sales rose 0.6% in August (+5.0% YoY), and Consumer Confidence fell 3.7% in September (4.15% YoY).
• Stock Markets rose in September: Dow +6.6%, S&P +2.9%, Nasdaq +4.8%.
• Oil Prices fell to $62/Barrel(Sep 30) from $64/Barrel (Aug 29).

 

Interest Rates and Fed Watch

As widely expected, the Fed cut the Fed Funds Rate at the September 17th FOMC Meeting. The new target range for Fed Funds is 4.0% – 4.25%. The reason for a Rate Cut – the Labor Market is weakening, and the Fed doesn’t want it to get any weaker. The Fed Statement said, “Recent indicators suggest that growth of economic activity moderated in the first half of the year. Job gains have slowed, and the unemployment rate has edged up but remains low. Inflation has moved up and remains somewhat elevated.” Fed Chairman Powell said, “The labor market is softening and we don’t need it to soften anymore.”

 

The Fed also signaled that it would lower Interest Rates two more times this year at the October and December FOMC Meetings, then pause until June 2026. This delay gives them time to see how lower Interest Rates affect the Economy. The Fed has a dual mandate to control Inflation and maintain a healthy Labor Market, which is a tricky balancing act. The next FOMC Meeting is October 28th and 29th. At this point, Fed Watchers expect another 0.25% cut in Interest Rates.

• 10-Year T-Note Yield fell to 4.15% (Sep 30) from 4.23% (Aug 29).
• 30-Year T-Bond Yield fell to 4.73% (Sep 30) from 4.92% (Aug 29).
• 30-Year Mortgage fell to 6.30% (Sep 25) from 6.56% (Aug 28).
• 15-Year Mortgage fell to 5.49% (Sep 25) from 5.69% (Aug 28).

 

Housing Market Data Released during September 2025

New Home Sales jumped 20.5% (+15.4% YoY) last month. That’s a big jump. However, the 30 days before the September release showed that New Home Sales fell 0.6% (-8.2% YoY). That’s a big swing in a month. Why? It could be that Home Buyers are sensing an upcoming reduction in Mortgage Rates and are taking advantage of Builder incentives. Another aspect to consider is that New Home data is notoriously volatile, so take each month’s data with a grain of salt and pay more attention to the trend. On the bright side, Inventory and Affordability are improving. There are currently 2,000,000 New and Existing Homes for sale, and Mortgage Rates are dropping.

• Existing Home Sales (closed deals in August) fell 0.2% to an annual rate of 4,000,000 homes (3,630,000 SFR + 370,000 Condos), up 1.8% in the last 12 months. The median Single Family Home price is $427,800, up 0.6% YoY. The Median Condo price is $366,800, up 0.6% YoY. Homes were on the market for an average of 31 days. Currently, 1,530,000 homes are for sale, up 11.7% YoY.
• New Home Sales (signed contracts in August) rose 20.5% to a seasonally adjusted annual rate of 800,000 Homes, up 15.4% YoY (683,000 New Homes were sold in 2024 and 668,000 in 2023). The median New Home price rose 4.7% to $413,500, up 1.9% YoY (Peak $496,800 Oct 2022). The average price rose 11.7% to $545,100, up 12.3% YoY (Peak $568,700 Dec 2022). There are approximately 497,000 New Homes for sale, up 4.0% YoY (Low of 281,000 in Oct 2020).
• Pending Home Sales Index (signed contracts in August) rose 4.0% to 74.7 from a revised 71.8 in July, up 3.8% YoY.
• Building Permits (issued in August) fell 3.7% to a seasonally adjusted annual rate of 1,312,000 units, down 11.1% YoY. Single-Family Permits fell 2.2% to an annual pace of 856,000 homes, down 11.5% YoY.
• Housing Starts (excavation began in August) fell 8.5% to a seasonally adjusted annual rate of 1,307,000, down 6.0% YoY. Single-Family Starts fell 7.0% to 890,000 units, down 11.7% YoY.
• Housing Completions (completed in August) rose 8.4% to a seasonally adjusted annual rate of 1,608,000 units, down 8.4% YoY. Single-Family Completions rose 6.7% to an annual adjusted rate of 1,090,000 homes, up 5.6% YoY.
• S&P/Case-Shiller 20 City Home Price Index fell 0.1% in July, up 1.8% YoY.
• FHFA Home Price Index fell 0.1% in July, up 2.3% YoY.
• The NAHB Index was unchanged at 32 in September from 32 in August and 33 in July, down 22.0% YoY.

 

Labor Market Economic Data Released during September 2025

The September Job Data is indicating that the Labor Market is softening. Despite what some analysts say, this is not a bad report – Wage growth is outpacing Inflation, New Jobs are being created, and Unemployment is low. If the Fed wanted to cool off the Labor Market with higher Interest Rates, it’s slowly working. So why do Economists get antsy when data indicates a softening Labor Market? Because the Labor Market has a nasty habit of slowly declining, then falling off a cliff. The Economy can tolerate Unemployment in the 4.5% – 5.0% range without sliding into a Recession.  However, if it shoots past 5.0% – that will cause pain.

• The Economy created 22,000 New Jobs during August, and 79,000 in July.
• The Unemployment Rate rose to 4.3% during August from 4.2% in July, and 4.1% in June.
• The Labor Force Participation Rate rose to 62.3% in August from 62.2% in July.
• The Average Hourly Wage rose 0.3% in August, up 3.7% YoY.
• Job Openings rose to 7,227,000 in August from 7,181,000 in July and 7,357,000 in June, down 5.5% YoY. (In 2024 average Job Openings was 7,800,000).

 

Inflation Economic Data Released during September 2025

According to data released in September, Inflation is still running hot. Both the CPI and Core PCE show Inflation at 2.9% – let’s round it off and call it 3.0%. Unless the Labor Market significantly softens in the next few months, expect Inflation to stay elevated. Even if the Unemployment Rate moves into the 4.5% – 5.0% range, Inflation may continue to be elevated for a while. That is the worst-case scenario – Stagflation – where Unemployment and Inflation both stay high. The Fed is hoping they can tame Inflation without hurting the Labor Market too much.

• CPI rose 0.4%, up 2.9% YoY      |  Core CPI rose 0.3%, up 3.1% YoY
• PPI fell 0.1%, up 2.6% YoY        |  Core PPI rose 0.3%, up 2.8% YoY
• PCE rose 0.3%, up 2.7% YoY    |  Core PCE rose 0.2%, up 2.9% YoY

 

GDP Economic Data Released during September 2025

The 3rd and final estimate of 2nd quarter 2025 GDP showed the US Economy grew by a 3.8% annualized rate (+2.1% YoY). The US  Economy is accelerating thanks to strong Consumer Spending and Businesses investing in plant and equipment. However, with the Economy growing at such a fast pace, it is more difficult for the Fed to fight Inflation and/or justify additional Interest Rate cuts.

 

Consumer Economic Data Released during September 2025

The September data points to a healthy Consumer. Consumer Income, Spending, and Savings Rate are all very good. Despite showing signs of Inflation fatigue, people are still out and about spending money at stores and online. We will see if that continues through the upcoming Holiday Season. Even though Consumer Data is positive, people are still worried about ongoing Inflation.

• Retail Sales rose 0.6% during August, up 5.0% in the last 12 months.
• Consumer Confidence Index fell 3.7% to 94.2 in September from 97.8 in August, down 5.0% YoY.
• Personal Income rose 0.4% in August, up 5.1% YoY.
• Personal Spending rose 0.6% in August, up 5.6% YoY.
• Personal Savings Rate fell to 4.6% from a revised 4.8% in July and 5.0% in June.

 

Energy, International, and Things You May Have Missed

• West Texas Intermediate Crude fell to $62/Barrel (Sep 30) from $64/Barrel (Aug 29).
• North Sea Brent Crude fell to $67/Barrel (Sep 30) from $68/Barrel (Aug 29).
• Gasoline (Wholesale Futures) fell to $1.98/Gal (Sep 30) from $2.19/Gal (Aug 29).
• Natural Gas rose to $3.33/MMBtu (Sep 30) from $3.00/MMBtu (Aug 29).

 

The Mortgage Economic Review is a concise summary of Key Economic Data that influences the Mortgage and Housing Markets. It’s a quick read that keeps busy Professionals updated on important Economic Information. Feel free to share this with colleagues in the Mortgage, Housing, Finance, and Banking business. To have the Mortgage Economic Review emailed to you each month, click here.

 

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This Economic Review is for informational and educational purposes only and should not be construed as investment, legal, financial, or mortgage advice. The information is gathered from sources believed to be credible and may be opinion-based and editorial in nature. Mortgage Elements Inc does not guarantee or warrant its accuracy or completeness, and there is no guarantee it is without errors. This newsletter is primarily intended for use Housing and Finance Professionals but it can be useful for anyone interested in Economics. This newsletter is not an advertisement to extend credit or solicit mortgage originations. © Copyright 2025 Mark Paoletti, Mortgage Elements Inc, All Rights Reserved.