11/02/2026
🏦 Fed Holds Steady, Inflation In Line
Week of October 26, 2026 in Review
The Federal Reserve held interest rates steady, inflation came in as expected, and home prices continued appreciating despite slower home sales.
Here's what matters for housing and mortgage rates. 👇
🏦 Fed Holds Rates Steady
The Fed voted to maintain its benchmark Federal Funds Rate at 3.75%–4.00%, following September's 0.25% increase.
The decision wasn't unanimous. Two policymakers favored another quarter-point hike, reflecting continued concerns about inflation.
The Fed's preferred inflation measure, PCE, showed:
📊 Headline PCE: +0.5% monthly / 3.6% annually
📊 Core PCE: +0.3% monthly / 3.1% annually
📉 Trimmed Mean Inflation: 2.3% annually
While inflation remains above the Fed's 2% target, the underlying Trimmed Mean measure suggests some price pressures may be more moderate.
What does this mean for mortgage rates?
The Fed is balancing inflation concerns against signs of a cooling labor market.
⚠️ Remember: The Fed does NOT directly set mortgage rates. Mortgage rates respond to bond markets, inflation expectations, economic growth and anticipated Fed policy.
🏡 New Home Sales Edge Lower
New Home Sales slipped 0.6% in September to an annualized pace of 676,000 homes.
That was still better than the 650,000 expected, although sales remain 5.3% below last year.
You may also see headlines about the median new-home price declining 3.9% annually.
But here's an important distinction:
👉 A lower median sales price does NOT necessarily mean home values are falling.
More homes priced between $300K and $400K sold, while fewer homes above $600K changed hands.
That shift in the mix of homes sold helped pull the median price lower.
📈 Home Prices Continue Appreciating
Broader home price indexes tell a different story.
Case-Shiller:
🏡 +0.3% in August
📈 +2.1% year-over-year
FHFA:
🏡 +0.3% in August
📈 +2.4% year-over-year
Despite affordability challenges, national home values continue to appreciate.
And even modest appreciation can add up over time, helping homeowners build equity and long-term wealth.
📊 Economic Growth Remains Strong
Third-quarter GDP grew at an annualized rate of 3.4%, up from 2.2% in Q2.
Consumer spending, government spending and business investment helped drive growth.
Meanwhile, initial jobless claims remained relatively low at 194,000, with continuing claims near 1.7 million.
📅 WHAT TO WATCH THIS WEEK
💼 Job Openings
🏢 Private Payrolls
👷 Jobless Claims
📋 Monthly Jobs Report
💡 BOTTOM LINE
Inflation remains elevated, but the Fed is taking a measured approach as it evaluates incoming economic data.
Meanwhile, home prices continue showing resilience even as higher mortgage rates weigh on sales.
For buyers and homeowners, understanding both market conditions and financing strategies remains important.
