October 20, 2026 – Is The Economy Strong?

Economic Commentary

Typically, we can answer this question beyond a shadow of a doubt. This year seems to be an exception.  Overall economic growth is measured by the Gross Domestic Product (GDP) and the economy averaged a 2.35% growth rate for the first half of the year. This amounts to a solid growth rate. Not too hot and certainly not too cold.  But if you look at the individual parts of the economy, another picture emerges. For example, job growth has averaged 68,000 per month thus far this year.  And in ordinary times, this rate of job growth would be considered very sluggish.  But as we have pointed out previously, our present stagnant population growth makes these times anything but ordinary.

Going to another important sector of the economy, real estate is painting a picture of languid growth. Earlier in the year, the real estate market was growing, albeit slowly, as mortgage rates headed toward 6.0%.  However, in the past few months, interest rates have increased markedly, and the real estate market has turned quite stagnant as a result. It should also be pointed out that higher interest rates are likely to affect other sectors of the economy as well, from automobile purchases to general consumer spending. Along with interest rates, higher energy prices can affect leisure and business travel as inflation definitely affects this sector of the economy.

One area which seems to be doing quite well is consumer spending.  Consumer spending is a significant part of the overall economy.  Some of the higher spending is as a result of inflation – consumers spending more to purchase the same products such as gasoline. Tax refunds resulting from last year’s tax bill have also provided a boost in consumer spending.  Generally, as long as consumers are spending, the economy is growing. However, if higher interest rates and higher inflation rates persist, eventually consumer spending will run out of steam. Thus far, the economy has not reached this crossroad. The overall picture? An economy that is growing, but there are some lights flashing yellow.

Weekly Interest Rate Overview

The Markets. Mortgage rates leveled off this past week after rising for the past few weeks. The inflation data came in hot, which seems like it would have pushed up rates further, but apparently the recent increases were in anticipation of the concerning inflation news.  The data did increase the chances for a Fed increase at their upcoming October meeting, but the markets are mostly still banking on the next increase coming in December. According to the Freddie Mac weekly survey, 30-year fixed rates remained at 7.40% last week. In addition, 15-year rates decreased slightly to 6.71%. A year ago, 30-year fixed rates averaged 6.27%, more than one percent lower than today.Note: Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.

Real Estate News

Most recent homebuyers say their real estate agent should coordinate the mortgage, title and insurance providers in a purchase, but the transaction still feels like a “hassle” for nearly seven in 10 buyers, according to consumer research released by HomeServices of America.  The national survey shows that the homebuying transaction remains fragmented and frustrating for most consumers, even as buyers overwhelmingly say they want their real estate agent at the center of an integrated team of mortgage, title and insurance professionals. The report, titled The Transaction Experience Buyers Want Now, is based on an original survey of 1,000 U.S. adults ages 25 to 64 who bought and financed a home within the past three years.  Nearly 70% of recent buyers described the homebuying transaction as a “hassle” — 21% said “very much so” and 49% said “somewhat.” Just 4% said it was not a hassle at all. Frustration with the process increases with household income, the study found. When asked about the biggest hassle in their transaction 46% cited uncoordinated service providers — including the real estate agent, mortgage lender, insurance carrier and title/closing company, 26% pointed to searching for a home online, 17% said touring homes and 8% named communicating with their agent. At the same time, most buyers enter the process expecting the agent to play a coordinating role. A combined 69% said they went into their home purchase believing it was their agent’s job to coordinate mortgage, title/closing and home insurance providers — 28% “very much so” and 41% “to a degree.” About one-third did not really expect, or did not at all expect, that level of coordination. Agent recommendations largely landed well with consumers. The survey found that 76% of buyers said their agent recommended a mortgage, title or home insurance provider, 95% of those who received recommendations viewed them as helpful or valuable, including 47% who said “very much so” and only 5% said the recommendations were not helpful.  Source: HousingWire

A damaged roof, flooded kitchen, or house fire can turn your life upside down overnight. But for many homeowners, the next financial emergency begins after the insurance claim is filed. A new analysis from the Consumer Federation of America and Weiss Ratings estimates that home insurers collectively earn an additional $8.8 million in investment income for every day claim payments are delayed. Stretch that delay to one week, and the industry could earn an estimated $61.6 million while homeowners wait for money to repair their properties and rebuild their lives. Home insurance companies dispute the idea that claims are deliberately stalled for profit. But regardless of what causes a delay, the financial consequences for homeowners can pile up quickly.  Homeowners insurance is supposed to provide money when a covered loss happens. Until that check arrives, however, homeowners may have to use emergency savings, borrow money, or charge repairs to a credit card. “When repair costs are put on a high-interest credit card and insurance reimbursement is months away, the financial consequences can get ugly quickly,” says Colin Ram, an insurance attorney and founder of Colin Ram Law in Mount Pleasant, SC. “And the mortgage payment doesn’t pause because the house is unlivable.”  The first move is simple: Stop relying on phone calls alone. “Get it in writing immediately,” Ram says. “After every call with the adjuster, follow up the same day with an email recapping what was said and asking for a written timeline. A phone call by itself proves nothing six months from now.” Keep copies of emails, estimates, receipts, photographs, temporary-housing bills, and every document sent to or received from the insurer. You should also read the claims-handling section of your policy and check your state insurance department’s website for deadlines insurers must follow.  Source: Realtor.com

Homeowners associations are pursuing foreclosure against more homeowners because of unpaid dues, as local communities wrestle with mounting financial pressure, new data shows. It is reported that real estate experts said the aggressive collection tactics are being driven by rising operating costs, shrinking reserve funds, and concerns that unpaid assessments could leave associations unable to cover essential expenses. The real estate analytics firm ATTOM reported that HOA-related foreclosures jumped nearly 40% compared with two years earlier, according to a Wall Street Journal report. ATTOM’s report also found HOA foreclosures are rising faster than overall mortgage foreclosure rates. “HOAs are being forced into more aggressive collections to avoid their own financial collapse,” Brian Fox, co-founder of real estate technology firm Benutech, which tracks HOA delinquency trends and foreclosures, told the Wall Street Journal. Typically, HOAs rely on monthly or annual dues from residents to fund maintenance, repairs, insurance, landscaping and other community services. But some homeowners are struggling with higher living costs and mounting expenses, causing more associations to face a rise in delinquent accounts. Rather than offer extended grace periods, some HOAs are moving delinquent accounts to attorneys more quickly or filing liens against homeowners who fall behind on assessments. The crackdown is widespread, affecting communities ranging from suburban condominium complexes to luxury neighborhoods.  Source: Fox Business