by Calculated Risk on 9/27/2025 02:11:00 PM

At the Calculated Risk Real Estate Newsletter this week:

Click on graph for larger image.

• NAR: Existing-Home Sales Decreased to 4.00 million SAAR in August

• New Home Sales increased to 800,000 Annual Rate in August

• FHFA’s Q2 National Mortgage Database: Outstanding Mortgage Rates, LTV and Credit Scores

• Household Formation Drives Housing Demand

• California Home Sales Down Year-over-year for 5th Straight Month

This is usually published 4 to 6 times a week and provides more in-depth analysis of the housing market.

by Calculated Risk on 9/27/2025 08:11:00 AM

The key report scheduled for this week is the September employment report on Friday.

Other key indicators include Case-Shiller house prices for July, the September ISM Manufacturing and Services indices, and September auto sales.

----- Monday, September 29th -----
10:00 AM: Pending Home Sales Index for August. The consensus is 0.1% increase in the index.

10:30 AM: Dallas Fed Survey of Manufacturing Activity for September.

----- Tuesday, September 30th -----
9:00 AM: S&P/Case-Shiller House Price Index for July.

This graph shows the year-over-year change in the seasonally adjusted National Index, Composite 10 and Composite 20 indexes through the most recent report (the Composite 20 was started in January 2000).

The consensus is for a 2.3% year-over-year increase in the National index for July.

9:00 AM: FHFA House Price Index for July. This was originally a GSE only repeat sales, however there is also an expanded index.

9:45 AM: Chicago Purchasing Managers Index for September. The consensus is for a reading of 43.0, up from 41.5 in August.

10:00 AM: Job Openings and Labor Turnover Survey for August from the BLS.

This graph shows job openings (black line), hires (purple), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.

----- Wednesday, October 1st -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

8:15 AM: The ADP Employment Report for September. This report is for private payrolls only (no government). The consensus is for 48,000 jobs added, down from 54,000 in August.

10:00 AM: ISM Manufacturing Index for September. The consensus is for a reading of 49.2, up from 48.7 in August. 

10:00 AM: Construction Spending for August. The consensus is for a 0.1% decrease.

----- Thursday, October 2nd -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for initial claims to increase to 220 thousand from 218 thousand last week.

All day: Light vehicle sales for September.

The consensus is for sales of 16.2 million SAAR, up from 16.1 million SAAR in August (Seasonally Adjusted Annual Rate).

This graph shows light vehicle sales since the BEA started keeping data in 1967. The dashed line is the current sales rate.



----- Friday, October 3rd -----
8:30 AM: Employment Report for September.   The consensus is for 43,000 jobs added, and for the unemployment rate to be unchanged at 4.3%.

There were 22,000 jobs added in August, and the unemployment rate was at 4.3%.

This graph shows the jobs added per month since January 2021.

10:00 AM: the ISM Services Index for September.

by Calculated Risk on 9/26/2025 01:17:00 PM

From BofA:

Since our last weekly publication, 3Q GDP tracking increased to 2.6% q/q saar from 2.1% & BEA revised 2Q GDP up from 3.3% to 3.8% in the third estimate. [September 26th comment]
emphasis added

From Goldman:

We boosted our Q3 GDP tracking estimate by 0.2pp to +2.8% (quarter-over-quarter annualized), reflecting stronger consumer spending in August and a more favorable monthly path between Q2 and Q3 than we had previously assumed. Our Q3 domestic final sales estimate now stands at +1.9%. [September 26th estimate]

And from the Atlanta Fed: GDPNow

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2025 is 3.9 percent on September 26, up from 3.3 percent on September 17. After recent releases from the US Census Bureau, the US Bureau of Economic Analysis, and the National Association of Realtors, a decrease in the nowcast of third-quarter real gross private domestic investment growth from 6.4 percent to 4.1 percent was more than offset by increases in the nowcast of third-quarter real personal consumption expenditures growth from 2.7 percent to 3.4 percent and the nowcast of the contribution of net exports to third-quarter real GDP growth from 0.08 percentage points to 0.58 percentage points. [September 26th estimate]

by Calculated Risk on 9/26/2025 10:17:00 AM

Today, in the Calculated Risk Real Estate Newsletter: FHFA’s Q2 National Mortgage Database: Outstanding Mortgage Rates, LTV and Credit Scores

A brief excerpt:

Here are some graphs on outstanding mortgages by interest rate, the average mortgage interest rate, borrowers’ credit scores and current loan-to-value (LTV) from the FHFA’s National Mortgage Database through Q2 2025 (released yesterday).
...
This shows the surge in the percent of loans under 3% starting in early 2020 as mortgage rates declined sharply during the pandemic.

Note that a fairly large percentage of mortgage loans were under 4% prior to the pandemic!

The percent of outstanding loans under 4% peaked in Q1 2022 at 65.1% (now at 52.5%), and the percent under 5% peaked at 85.6% (now at 70.4%). These low existing mortgage rates made it difficult for homeowners to sell their homes and buy a new home since their monthly payments would increase sharply.

This was a key reason existing home inventory levels were so low. However, time is eroding this lock-in effect.

There is much more in the article.

by Calculated Risk on 9/26/2025 08:30:00 AM

From the BEA: Personal Income and Outlays, August 2025

Personal income increased $95.7 billion (0.4 percent at a monthly rate) in August, according to estimates released today by the U.S. Bureau of Economic Analysis. Disposable personal income (DPI)—personal income less personal current taxes—increased $86.1 billion (0.4 percent) and personal consumption expenditures (PCE) increased $129.2 billion (0.6 percent).

Personal outlays—the sum of PCE, personal interest payments, and personal current transfer payments—increased $132.9 billion in August. Personal saving was $1.06 trillion in August and the personal saving rate—personal saving as a percentage of disposable personal income—was 4.6 percent.
...
From the preceding month, the PCE price index for August increased 0.3 percent. Excluding food and energy, the PCE price index increased 0.2 percent.

From the same month one year ago, the PCE price index for August increased 2.7 percent. Excluding food and energy, the PCE price index increased 2.9 percent from one year ago.
emphasis added

The August PCE price index increased 2.7 percent year-over-year (YoY), up from 2.6 percent YoY in July.

The PCE price index, excluding food and energy, increased 2.9 percent YoY, unchanged from 2.9 percent in July.

The following graph shows real Personal Consumption Expenditures (PCE) through August 2025 (2017 dollars). Note that the y-axis doesn't start at zero to better show the change.

Click on graph for larger image.

The dashed red lines are the quarterly levels for real PCE.

Personal income and PCE were above expectations.

Inflation was at expectations.

Using the two-month method to estimate Q3 real PCE growth, real PCE was increasing at a 4.0% annual rate in Q3 2025. (Using the mid-month method, real PCE was increasing at 3.0%).  This suggests decent PCE growth in Q3.

by Calculated Risk on 9/25/2025 08:00:00 PM

Note: Mortgage rates are from MortgageNewsDaily.com and are for top tier scenarios.

Friday:
• At 8:30 AM ET, Personal Income and Outlays, August 2025.  The consensus is for a 0.3% increase in personal income, and for a 0.5% increase in personal spending. And for the Core PCE price index to increase 0.2% (up 2.9% YoY).

• At 10:00 AM: University of Michigan's Consumer sentiment index (Final for September). The consensus is for a reading of 55.4.

by Calculated Risk on 9/25/2025 04:56:00 PM

From J.D. Power: J.D. Power-GlobalData Forecast September 2025 Brief excerpt:

Total new-vehicle sales for September 2025, including retail and non-retail transactions, are projected to reach 1,232,200, a 0.1% increase year over year, according to a joint forecast from J.D. Power and GlobalData. September 2025 has 24 selling days, one more than September 2024. Comparing the same sales volume without adjusting for the number of selling days translates to an increase of 4.5% from 2024.

The seasonally adjusted annualized rate (SAAR) for total new-vehicle sales is expected to be 16.2 million units, up 0.3 million units from September 2024.
...
Thomas King, president of the data and analytics division at J.D. Power:
“In aggregate, September sales results point to another month of strong demand for new vehicles. However, as has been the case for the past few months, assessing the health of the industry requires a closer look at the underlying market dynamics.

“The biggest driver of September’s strong sales pace is temporarily inflated demand for electric vehicles. The federal EV tax credit expires at the end of the month, which is causing many shoppers to accelerate their purchase. EV share of retail sales is expected to reach a record of 12.2% this month—up 2.6 percentage points from a year ago. On a volume basis, this equates to a 27.5% increase in EV sales—selling day adjusted—from a year ago. Conversely, demand for non-EVs is muted, with non-EV sales down 2.5% this month from a year ago. The second key driver is affordability. Although again, the EV dynamic means aggregate results need careful evaluation. In totality, average vehicle prices continue to rise, discounts remain low and monthly finance payments are at record highs—all of which affects the overall sales pace.”
emphasis added

From Haig Stoddard at Omdia (pay site): US Light Vehicle Sales in September Tracking to Another Gain as Auto Industry Casts a Wary Eye on 4Q

September US light-vehicle sales will continue the market strength seen all year, but all eyes are on the fourth quarter as tariff-related pull-ahead volume dissipates, EV credits disappear, and automakers price their ’26 models.

Click on graph for larger image.

This graph shows actual sales from the BEA (Blue), and J.D. Power's forecast for September (Red).

On a seasonally adjusted annual rate basis, the J.D. Power forecast of 16.2 million SAAR would be up 0.8% from last month, and up 2.5% from a year ago.

Q4 will likely be more difficult for vehicle sales.

by Calculated Risk on 9/25/2025 02:40:00 PM

Hotel occupancy was weak over the summer months, due to less international tourism.  The fall months are mostly domestic travel and occupancy is still down year-over-year.

From STR: U.S. hotel results for week ending 20 September

The U.S. hotel industry reported negative year-over-year comparisons, according to CoStar’s latest data through 20 September. ...

14-20 September 2025 (percentage change from comparable week in 2024):

• Occupancy: 68.1% (-1.1%)
• Average daily rate (ADR): US$168.98 (-0.3%)
• Revenue per available room (RevPAR): US$115.12 (-1.4%)
emphasis added

The following graph shows the seasonal pattern for the hotel occupancy rate using the four-week average.

Click on graph for larger image.

The red line is for 2025, blue is the median, and dashed light blue is for 2024.  Dashed purple is for 2018, the record year for hotel occupancy. 

The 4-week average of the occupancy rate is tracking behind both last year and the median rate for the period 2000 through 2024 (Blue).

Note: Y-axis doesn't start at zero to better show the seasonal change.

The 4-week average will increase during the Fall travel period.

On a year-to-date basis, the only worse years for occupancy over the last 25 years were pandemic or recession years.

by Calculated Risk on 9/25/2025 10:54:00 AM

Today, in the CalculatedRisk Real Estate Newsletter: NAR: Existing-Home Sales Decreased to 4.00 million SAAR in August

Excerpt:

The fourth graph shows existing home sales by month for 2024 and 2025.

Sales were up 1.8% year-over-year compared to August 2024. Next month will also have an easy year-over-year comparison.
...
On an NSA basis for the month of August, this was 7% above the low for housing bust for the month of August that happened in August 2010. Year-to-date, sales are down 1.2% NSA.

There is much more in the article.

by Calculated Risk on 9/25/2025 10:00:00 AM

From the NAR: NAR Existing-Home Sales Report Shows 0.2% Decrease in August

• 0.2% decrease in total existing-home sales1 month-over-month to a seasonally adjusted annual rate of 4.0 million.

• 1.8% increase in sales year-over-year.

• 1.53 million units: Total housing inventory, down 1.3% from July and up 11.7% from August 2024 (1.37 million).

• 4.6-month supply of unsold inventory, no change from July and up from 4.2 months in August 2024.

• $422,600: Median existing-home price3 for all housing types, up 2.0% from one year ago ($414,200) – the 26th consecutive month of year-over-year price increases.
emphasis added

Click on graph for larger image.

This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1994.

Sales in August (4.00 million SAAR) were down 0.2% from the previous month and were up 1.8% compared to the August 2024 sales rate.  

The second graph shows nationwide inventory for existing homes.

According to the NAR, inventory decreased to 1.53 million in August from 1.55 million the previous month.

Headline inventory is not seasonally adjusted, and inventory usually decreases to the seasonal lows in December and January, and peaks in mid-to-late summer.

The last graph shows the year-over-year (YoY) change in reported existing home inventory and months-of-supply. Since inventory is not seasonally adjusted, it really helps to look at the YoY change. Note: Months-of-supply is based on the seasonally adjusted sales and not seasonally adjusted inventory.

Inventory was up 11.7% year-over-year (blue) in August compared to August 2024.

Months of supply (red) was unchanged at 4.6 months in August from 4.6 months the previous month.

I'll have more later. 

by Calculated Risk on 9/25/2025 08:42:00 AM

From the BEA: Gross Domestic Product, 2nd Quarter 2025 (Third Estimate), GDP by Industry, Corporate Profits (Revised), and Annual Update

Real gross domestic product (GDP) increased at an annual rate of 3.8 percent in the second quarter of 2025 (April, May, and June), according to the third estimate released by the U.S. Bureau of Economic Analysis. In the first quarter, real GDP decreased 0.6 percent (revised).

The increase in real GDP in the second quarter primarily reflected a decrease in imports, which are a subtraction in the calculation of GDP, and an increase in consumer spending. These movements were partly offset by decreases in investment and exports.

Real GDP was revised up 0.5 percentage point from the second estimate, primarily reflecting an upward revision to consumer spending.
emphasis added

Here is a Comparison of Third and Second Estimates. PCE growth was revised up from 1.6% to 2.5%. Residential investment was revised down from -4.7% to -5.1%.

by Calculated Risk on 9/25/2025 08:30:00 AM

The DOL reported:

In the week ending September 20, the advance figure for seasonally adjusted initial claims was 218,000, a decrease of 14,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 231,000 to 232,000. The 4-week moving average was 237,500, a decrease of 2,750 from the previous week's revised average. The previous week's average was revised up by 250 from 240,000 to 240,250.
emphasis added

The following graph shows the 4-week moving average of weekly claims since 1971.

Click on graph for larger image.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased to 237,500.

The previous week was revised up.

Weekly claims were well below the consensus forecast.

by Calculated Risk on 9/24/2025 08:52:00 PM

Note: Mortgage rates are from MortgageNewsDaily.com and are for top tier scenarios.

Thursday:
• At 8:30 AM ET, The initial weekly unemployment claims report will be released. The consensus is for initial claims to increase to 234 thousand from 231 thousand last week.

• At 8:30 AM, Gross Domestic Product, 2nd Quarter 2025 (Third Estimate), GDP by Industry, and Corporate Profits (Revised) The consensus is that real GDP increased 3.3% annualized in Q2, unchanged from the second estimate of 3.3%.

• At 8:30 AM, Durable Goods Orders for August from the Census Bureau. The consensus is for a 0.5% decrease in durable goods orders.

• At 10:00 AM, Existing Home Sales for August from the National Association of Realtors (NAR). The consensus is for 3.98 million SAAR, down from 4.01 million in July.

Housing economist Tom Lawler expects the NAR to report August sales of 3.93 million SAAR.

• At 11:00 AM, the Kansas City Fed manufacturing survey for September.

by Calculated Risk on 9/24/2025 04:50:00 PM

Note: This index is a leading indicator primarily for new Commercial Real Estate (CRE) investment including multi-family residential.

From the AIA: ABI August 2025: Softness persists at architecture firms

The AIA/Deltek Architecture Billings Index (ABI) score was 47.2 for the month of August 2025. The share of firms reporting declining billings in August fell modestly from July, but overall, most firms continue to report a downward trajectory. In addition, inquiries softened in August and were essentially flat, after small increases over the previous three months. In addition, the value of new design contracts declined for the 18th consecutive month, the longest period of decline since we started collecting this data 15 years ago. This year has seen generally soft inquiries into new projects and a steady decrease in the value of newly signed design contracts, as clients remain cautious about committing to new projects. Without new work on the horizon, many firms will likely continue to experience declining billings in the coming months.

While business conditions remained soft at firms in most regions of the country in August, firms located in the South reported essentially flat conditions for the fourth consecutive month. In contrast, firms located in the West saw their billings soften this month, as they reported their weakest conditions in nearly two years. By specialization, firms with a commercial/industrial specialization reported modest growth in August for the first time in three years. And firms with a multifamily residential specialization have also seen improving conditions in the last few months and saw essentially flat billings this month. In contrast, business conditions have softened recently at firms with an institutional specialization to their lowest levels since 2020. Uncertainty with government budgets in recent months continues to cause uncertainty for many firms specializing in institutional facilities.
...
The ABI serves as a leading economic indicator that leads nonresidential construction activity by approximately 9-12 months.
emphasis added

• Northeast (46.2); Midwest (48.0); South (49.9); West (43.5)

• Sector index breakdown: commercial/industrial (50.8); institutional (44.5); multifamily residential (49.9)

Click on graph for larger image.

This graph shows the Architecture Billings Index since 1996. The index was at 47.2 in August, up from 46.2 in July.  Anything below 50 indicates a decrease in demand for architects' services.

This index has indicated contraction for 33 of the last 35 months.

Note: This includes commercial and industrial facilities like hotels and office buildings, multi-family residential, as well as schools, hospitals and other institutions.

This index usually leads CRE investment by 9 to 12 months, so this index suggests a slowdown in CRE investment throughout 2025 and into 2026.

Multi-family billings have been below 50 for 37 consecutive months.  This suggests we will some further weakness in multi-family starts.

by Calculated Risk on 9/24/2025 02:16:00 PM

From Intercontinental Exchange: ICE First Look at Mortgage Performance: Delinquencies Up on Calendar Effect; Foreclosure Activity Slowly Trending Higher

Intercontinental Exchange, Inc. (NYSE:ICE) ... today released its August 2025 ICE First Look at mortgage delinquency, foreclosure and prepayment trends. The data shows the national delinquency rate rose in August, largely driven by a calendar anomaly, while foreclosure activity continued its slow upward trend.

“The rise in the national delinquency rate for August is best understood in the context of how the calendar can impact payment processing,” said Andy Walden, Head of Mortgage and Housing Market Research at ICE. “Most of the uptick in the national delinquency rate can be attributed to delayed processing of end-of-month payments, as August closed on a Sunday this year. This calendar-driven effect is consistent with what we observed in prior years, so the increase should be considered a temporary adjustment rather than a shift in underlying borrower health.”

Key takeaways from the ICE First Look include:

• The national delinquency rate rose by 16 basis points (bps) in August to 3.43%, up 10 bps from the same time last year, marking a return to annual increases after temporary reprieves in June and July.

• Mortgage delinquencies typically face little seasonal pressure from July to August, but the last day of August 2025 falling on a Sunday resulted in delayed processing and temporarily higher delinquency rolls. For instance, August 2003, 2008, and 2014 also ended on a Sunday, each experiencing a delinquency rise averaging 5.3%. This is similar to the 5.0% rise observed this year – suggesting that much of August’s delinquency rise may have been driven by the way the calendar fell.

• FHA loans continue to see the largest annual increases, with the non-current rate (delinquencies including foreclosures) up by 86 bps to 12.0% in August, while the non-current rates for VA, GSE, and portfolio-held mortgages remained effectively flat year over year.

• Serious delinquencies (loans 90+ days past due but not in foreclosure) rose by 16,000 in August and are up 32,000 year over year, while loans in active foreclosure increased by 3,000 for the month and 23,000 since last year.

• Foreclosure starts rose year-over-year (+6%) for the ninth consecutive month, and foreclosure sales (+22.5%) are up from the same time last year for the sixth consecutive month, contributing to a 12.3% annual increase in foreclosure inventory.

• Inflows and transitions to later stages of delinquency increased across the board, while cures to current from both early- and late-stage delinquency fell.

• August prepayment activity slipped by 1 bp to a 0.66% single month mortality (SMM) rate, reflecting seasonal home buying patterns and relatively steady interest rates in July.
emphasis added

Click on graph for larger image.

Here is a table from ICE.

by Calculated Risk on 9/24/2025 10:59:00 AM

Today, in the Calculated Risk Real Estate Newsletter: New Home Sales increased to 800,000 Annual Rate in August

Brief excerpt:

The Census Bureau reported New Home Sales in August were at a seasonally adjusted annual rate (SAAR) of 800 thousand. The previous three months were revised up, combined.
...
The next graph shows new home sales for 2024 and 2025 by month (Seasonally Adjusted Annual Rate). Sales in August 2025 were up 15.4% from August 2024.

There is much more in the article.

by Calculated Risk on 9/24/2025 10:00:00 AM

The Census Bureau reports New Home Sales in August were at a seasonally adjusted annual rate (SAAR) of 800 thousand.

The previous three months were revised up, combined.

Sales of new single-family houses in August 2025 were at a seasonally-adjusted annual rate of 800,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 20.5 percent above the July 2025 rate of 664,000, and is 15.4 percent above the August 2024 rate of 693,000.
emphasis added

Click on graph for larger image.

The first graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate.

New home sales were above pre-pandemic levels.

The second graph shows New Home Months of Supply.

The months of supply was decreased in August to 7.4 months from 9.0 months in July.

The all-time record high was 12.2 months of supply in January 2009. The all-time record low was 3.3 months in August 2020.

This is above the top of the normal range (about 4 to 6 months of supply is normal).

"The seasonally-adjusted estimate of new houses for sale at the end of August 2025 was 490,000. This is 1.4 percent below the July 2025 estimate of 497,000, and is 4.0 percent above the August 2024 estimate of 471,000.

This represents a supply of 7.4 months at the current sales rate. The months' supply is 17.8 percent below the July 2025 estimate of 9.0 months, and is 9.8 percent below the August 2024 estimate of 8.2 months."

Sales were well above expectations of 653 thousand SAAR and sales for the three previous months were revised up, combined. I'll have more later today.

by Calculated Risk on 9/24/2025 07:00:00 AM

From the MBA: Mortgage Applications Increase in Latest MBA Weekly Survey

Mortgage applications increased 0.6 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending September 19, 2025.

The Market Composite Index, a measure of mortgage loan application volume, increased 0.6 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 0.1 percent compared with the previous week. The Refinance Index increased 1 percent from the previous week and was 42 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 0.3 percent from one week earlier. The unadjusted Purchase Index decreased 1 percent compared with the previous week and was 18 percent higher than the same week one year ago.

“Mortgage rates declined further last week, with the 30-year fixed rate falling to its lowest level since last September to 6.34 percent. Interest rates generally have moved up following the FOMC meeting last week but remain in a range that should continue to lead to increased refinance activity. Refinance volume increased further last week and is now 80 percent higher than four weeks ago, accounting for more than 60 percent of all application activity,” said Mike Fratantoni, MBA’s SVP and Chief Economist. “The refinance boost last week was from government applications, with VA refinance volume up almost 15 percent. While homebuyer demand typically tends to decrease during the fall, purchase application activity remains relatively strong right now, running 18 percent ahead of last year’s pace.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) decreased to 6.34 percent from 6.39 percent, with points increasing to 0.57 from 0.54 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
emphasis added

Click on graph for larger image.

The first graph shows the MBA mortgage purchase index.

According to the MBA, purchase activity is up 18% year-over-year unadjusted. 

Red is a four-week average (blue is weekly).  

Purchase application activity is still depressed, but above the lows of 2023 and slightly above the lowest levels during the housing bust.  

The second graph shows the refinance index since 1990.

The refinance index has increased significantly from the bottom as mortgage rates declined.

by Calculated Risk on 9/23/2025 07:56:00 PM

Note: Mortgage rates are from MortgageNewsDaily.com and are for top tier scenarios.

Wednesday:
• At 7:00 AM ET, The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

• At 10:00 AM: New Home Sales for August from the Census Bureau. The consensus is for 653 thousand SAAR, up from 652 thousand in July.

• During the day: The AIA's Architecture Billings Index for August (a leading indicator for commercial real estate).

by Calculated Risk on 9/23/2025 05:11:00 PM

From Fed Chair Powell: Economic Outlook. Excerpts:

In the labor market, there has been a marked slowing in both the supply of and demand for workers—an unusual and challenging development. In this less dynamic and somewhat softer labor market, the downside risks to employment have risen. The unemployment rate edged up to 4.3 percent in August but has remained relatively stable at a low level over the past year. Payroll job gains slowed sharply over the summer months, as employers added an average of just 29,000 per month over the past three months. The recent pace of job creation appears to be running below the "breakeven" rate needed to hold the unemployment rate constant. But a number of other labor market indicators remain broadly stable. For example, the ratio of job openings to unemployment remains near 1. And multiple measures of job openings have been moving roughly sideways, as have initial claims for unemployment insurance.

Inflation has eased significantly from its highs of 2022 but remains somewhat elevated relative to our 2 percent longer-run goal. The latest available data indicate that total PCE prices rose 2.7 percent over the 12 months ending in August, up from 2.3 percent in August 2024. Excluding the volatile food and energy categories, core PCE prices rose 2.9 percent last month, also higher than the year-ago level. Goods prices, after falling last year, are driving the pickup in inflation. Incoming data and surveys suggest that those price increases largely reflect higher tariffs rather than broader price pressures. Disinflation for services continues, including for housing. Near-term measures of inflation expectations have moved up, on balance, over the course of this year on news about tariffs. Beyond the next year or so, however, most measures of longer-term expectations remain consistent with our 2 percent inflation goal.

The overall economic effects of the significant changes in trade, immigration, fiscal and regulatory policy remain to be seen. A reasonable base case is that the tariff-related effects on inflation will be relatively short lived—a one-time shift in the price level. A "one-time" increase does not mean "all at once." Tariff increases will likely take some time to work their way through supply chains. As a result, this one-time increase in the price level will likely be spread over several quarters and show up as somewhat higher inflation during that period.

But uncertainty around the path of inflation remains high. We will carefully assess and manage the risk of higher and more persistent inflation. We will make sure that this one-time increase in prices does not become an ongoing inflation problem.
...
Near-term risks to inflation are tilted to the upside and risks to employment to the downside—a challenging situation. Two-sided risks mean that there is no risk-free path. If we ease too aggressively, we could leave the inflation job unfinished and need to reverse course later to fully restore 2 percent inflation. If we maintain restrictive policy too long, the labor market could soften unnecessarily. When our goals are in tension like this, our framework calls for us to balance both sides of our dual mandate.