October 27, 2026 – It’s Fed Day

Economic Commentary

Today the Federal Reserve meets for the first time since their meeting in September and hiked the Fed’s benchmark interest rate by 0.25%. A lot has happened since this last meeting, and a lot is going to happen immediately after the meeting.  Let’s cover the past first.  We had a surprisingly weak September jobs report released the first week in October. We have also had numerous attacks on tankers in the Middle East, keeping tensions and oil prices high during the month of October.  Inflation readings have continued to come in higher than the Fed’s target, but inflation does not seem to be accelerating. Plus, in early October the minutes of the last Fed meeting were released indicating that at least one more rate hike would be appropriate some time before the end of the year. 

What is coming? This is going to be a very busy time for economic data and events. After the Fed meeting this week, we will see the first estimate of economic growth for the third quarter (GDP) and the release of the Fed’s favorite inflation reading – the PCE Price Index. Along with inflation, the pace of economic growth will be a big factor in determining the next Fed move. Then next Tuesday is Election Day.  As we mentioned in the past, the Fed has been reticent to take actions affecting the elections unless urgent action was necessary. Though midterm elections may not have the same type of focus. And just to make things even more interesting, we end next week with the October jobs report. 

Having a Fed meeting, the jobs report and the GDP all within 10 days gives us the trifecta of economic happenings.  Right now, the markets are not necessarily predicting a Fed rate increase during this week’s meeting, but anything could happen. However, there is no doubt that the data releases coming after the meeting will go a long way towards determining whether the Fed will raise rates again this year.  If it does not happen this week, there is only one more Fed meeting this year and that is in early December. We will see another jobs report, additional inflation data and a revision of the GDP numbers before that meeting.  Some sort of resolution of the conflict in the Middle East would also help with some good news for the markets. Ending the year with some good news and no further rate increase from the Fed would be very welcome.

Weekly Interest Rate Overview

The Markets. Mortgage eased this week, providing some relief for the housing market. They continued to fall after the survey was released on Thursday as the bond markets reacted to weak housing data, stock market jitters and continued tension in the Middle East. According to the Freddie Mac weekly survey, 30-year fixed rates fell to 7.32% last week from 7.40% the previous week. In addition, 15-year rates decreased to 6.68%. A year ago, 30-year fixed rates averaged 6.19%, more than 1.0% 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

A dollar buys less of everything than it used to, but its purchasing power has especially declined in the housing market. Since 1984, home prices have grown 441% compared with just 210% for inflation. Clever Real Estate compared four decades of federal home price data with the Consumer Price Index, then ran the same comparison across the 50 most populous U.S. metros over the past 15 years. Home prices in all 50 of the largest U.S. metros have outpaced inflation since 2011, with prices at least tripling in 13 of them. Over the past year, however, the tide has started to turn, with home prices trailing inflation in 27 of the 50 metros.  The median U.S. home sold for $78,200 in 1984 and sells for $423,100 now, an increase of 441%. Inflation over those same four decades rose just 210%. If home prices matched inflation’s 210% increase, the median home would cost $242,309, which is $180,791 less than today’s actual price.  In 1990, the median home cost $123,900. Home prices have since increased 241.5% compared with 146.3% for inflation. If home prices increased only as much as inflation, the median home now would cost $305,193, a gap of $117,907 from today’s actual median price.  In 2000, the median home price was $165,300 and has since increased 156% compared with 87% for inflation. The median home now would cost $309,043 if it kept pace with inflation, a $114,057 gap from today’s actual median. Nationally, inflation rose 47.7% between January 2011 and January 2026. Home prices rose faster than that in all 50 of the largest metros, ranging from 65.5% in Baltimore to 344% in Miami, with a median increase of 151%.  Source: Clever Real Estate

A significant coverage deficiency exists for numerous homeowners, though most remain unaware of this vulnerability, as indicated by insurance professionals, according to a CNBC report. This gap in protection exposes policyholders to considerable financial risk from damage caused by increasingly prevalent and expensive natural disasters, including wildfires, hurricanes, and flooding—thereby jeopardizing their most substantial financial investment, according to industry specialists. Consumers have experienced considerable increases in the expenses associated with maintaining adequate insurance protection in recent years, driven by escalating insurance premium rates. According to industry experts, the following represent some of the most significant insurance coverage deficiencies among consumers include flooding, rebuilding costs and limits on specific items. “A supermajority of homeowners want to fully and adequately insure their homes, are willing to pay for it, and think they have it,” Kenneth Klein, a law professor at California Western School of Law, wrote this year in a Lewis & Clark Law Review article. “But most of them are wrong and are short by a lot.” Approximately 90% of owner-occupied residences throughout the U.S. maintain insurance coverage, according to Klein. Standard homeowners insurance policies establish financial restrictions on coverage through multiple mechanisms—including the exclusion of particular disaster categories or the establishment of maximum reimbursement amounts for specific items or categories of damage. “This data shows that there is a barely hidden nationwide crisis of underinsurance,” Klein wrote. The dynamic “persistently and inevitably robs homeowners of any chance to fully recover what they have lost.”  Source: MP Daily

In 2005, there were about 1.5 million owner-occupied homes in the United States valued at least $1 million. They represented only 2% of all owner-occupied homes. By 2024, that number had increased to about 6.9 million homes, accounting for 8%. In many parts of the country, especially coastal areas, the increase reflects years of home price appreciation. Homes that once sold for a few hundred thousand dollars now exceed the million-dollar mark. For example, in Hawaii about 40% of owner-occupied homes are worth at least $1 million. The share is almost that high in the District of Columbia (31.5%) and California (31.3%). Compare that with most areas in the Midwest and South. In Mississippi, North Dakota, and West Virginia, only about 1% of owner-occupied homes are worth at least $1 million. States such as Iowa, Indiana, Kentucky, Louisiana, Nebraska, and Ohio are all below 2%.  Source: NAR