Category Archives: Finance & Economics

The U.S. labor market rebounded in October, with nonfarm payroll employment increasing by 165,000 jobs and the unemployment rate declining to 4.1%. However, the improvement in overall employment contrasts with continued weakness in residential construction, where employment fell by 16,400 jobs, the largest monthly decline since March 2021. Despite the October rebound, the labor market has recorded job losses in seven of the past 22 months. … Employment in the overall construction sector declined by 3,000 jobs in October, marking its first monthly decline since February, following an upwardly revised gain of 16,000 in September. Within the industry, residential construction employment fell by 16,400, the largest monthly decline since March 2021. In contrast, non-residential construction employment increased by approximately 13,300.

New multifamily housing confidence weakened year-over-year in the third quarter, according to the Multifamily Market Survey (MMS) by the NAHB. The MMS produces two separate indices. The Multifamily Production Index (MPI) had a reading of 41, down five points year-over-year, while the Multifamily Occupancy Index (MOI) had a reading of 69, also down five points year-over-year. Developer sentiment for new multifamily production has softened, due to challenges such as high interest rates, construction costs that are high relative to rents, and problems getting projects approved and connected to roads and utilities, resulting in many projects taking longer to complete. Due to the headwinds facing the industry, NAHB’s 2027 forecast shows a decline for multifamily starts.

On the latest episode of NAHB’s podcast, Housing Developments, CEO Jim Tobin and COO Paul Lopez are joined by Chief Advocacy Officer Ken Wingert to discuss the immediate aftermath of the midterm elections. …Hakeem Jeffries is expected to become Speaker of the House, and Chuck Schumer is expected to be Majority Leader in the Senate. Speaker Mike Johnson has already announced he won’t return to leadership, and Steve Scalise and Jim Jordan have signaled they will seek the Speaker role. NAHB has already been meeting with both sides of the aisle to discuss housing policies, including the possibility of a Housing 2.0 effort. …NAHB will do a deeper dive on the election results and what they mean for housing in a members-only webinar on Nov. 9 at 2 p.m. EST. Register now to attend.

Marc Brinkmeyer, founder of Idaho Forest Group, told International Softwood Conference 2026 in Dublin that US lumber demand will be flat this decade and fall in the next: owning the median home takes 44% of income, population growth is projected at 0.24% in 2026, and the pulp and paper mills that buy residues are closing. European softwood shipments to North America were down 35% in January–July 2026. Highlights include:

US Mortgage rates rose sharply again in October as the U.S. treasury yields surged. According to Freddie Mac, the 30-year fixed-rate mortgage averaged 7.33% in October, up 47 basis points (bps) from September. The rate reached 7.40% in early October, its highest level since 2023, before easing toward the end of the month. …Compared with a year ago, the average 30-year and 15-year mortgage rates were higher by 108 bps and 117 bps, respectively. The 10-year Treasury yield, a key benchmark for long-term borrowing, increased 21 bps to an average of 5.15% in October, although yields eased during the latter part of the month. Inflation concerns continued to put upward pressure on Treasury yields, as elevated energy prices stemming from the ongoing conflict with Iran contributed to accelerating inflation. Inflation accelerated to 3.7% in September from 3.4% in August.

• Related in CNBC News: Mortgage rates drop for the third straight week, but homebuyers are still leaving the market

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The Democratic Party scored a big win in yesterday’s US midterms, securing dual control of Congress. …The biggest surprise came from the Senate, where Democrats won seven additional seats… As the likelihood of a ‘blue wave’ grew over the course of the evening, US equity futures turned negative – particularly for the tech-heavy Nasdaq. The initial concern is that a bigger-than-expected win emboldens the more progressive wing of the Democratic Party to push for more AI regulation. Yet these concerns quickly dissipated, with futures for all major equity benchmarks rising decisively ahead of the open. Some of this is linked to President Trump’s acknowledgment of the Democratic win, eliminating the risk of a contested election.

Why this matters: Today’s chart shows how the market the reaction is consistent with robust stock market performance in the year after Midterms, including when both chambers flip, and when Congress control creates gridlock with the administration’s policies. In the current context, and barring greater AI regulation, such gridlock may prove favourable by reducing the likelihood of a much larger deficit. What is less clear are the implications for the Iran war. Foreign policy is one area with ample executive authority, and so any Congressional actions to restrain military action could be easily overruled. In our view, the decisive win slightly increases the odds of de-escalation next year, by simply confirming the public’s dislike of a protracted conflict, given its adverse impact on purchasing power and even job creation.

Tariffs have raised the prices of materials ranging from drywall to windows to lumber. President Trump’s 50% tariff on imports of aluminum, for example, which is used for siding, window frames and gutters, has combined with higher energy bills to push up prices for the material dramatically.  Home builders also face rising costs for distribution, storage and transportation of materials and tools. Soaring diesel prices have raised costs for trucking firms delivering plywood, concrete and floorboards to jobsites. Wholesalers and retailers are lifting prices because of rising expenses tied to tariffs and energy inflation. Labor is getting harder to find and more expensive too. Many skilled tradespeople are opting to work on lucrative data-center projects rather than on homes. Meanwhile, the Trump administration’s crackdown on immigration and sharp increase in deportations have devastated home builders’ workforces in some parts of the country. [to access the full story a WSJ subscription is required]

US construction spending fell in September, nearly reversing the prior month’s upwardly revised jump, likely because ​high materials costs depressed outlays on residential renovation ‌projects. The Commerce Department’s Census Bureau said that construction spending fell 1.9% after an upwardly revised 2.0% increase in August. Economists had forecast construction spending would ​climb 0.3% after a previously reported 0.9% rise ⁠in August. Construction spending dropped 2.7% on a year-over-year basis ​in September. Spending on private construction projects decreased 2.4% in ​September after gaining 2.6% in August. Investment in residential projects slumped 5.5% in September, likely reflecting weakness in renovations. Outlays on single-family housing ​projects were unchanged but down 2.4% on a year-over-year ​basis. …The average rate on a 30-year fixed-rate mortgage has soared by at least 125 basis points since the war started in ​late February, ​data from ⁠mortgage finance firm Freddie Mac showed.

Private residential construction spending decreased in September 2026 driven by a steep decline in improvement (remodeling) spending. According to the U.S. Census Bureau, private residential construction spending came in at a seasonally adjusted annual rate (SAAR) of $848.8 billion in September, down 5.5% from the revised August estimates and lower by 8.9% from last year. The decrease in spending was primarily due to a sharp decline in improvement (remodeling) spending, which declined 13.0%. Over the year, remodeling spending was down 18.0%. Both spending on single-family and multifamily construction were unchanged from August but were down by 2.4% and 0.2% from a year ago, respectively. The decline in single-family construction spending is consistent with weak builder sentiment reflected in the NAHB/Wells Fargo Housing Market Index (HMI), amid rising interest rates, energy and material costs.

Housing’s share of the economy was 15.7% in the third quarter of 2026, according to the latest estimates of GDP produced by the Bureau of Economic Analysis. This share is down from 15.8% in the second quarter and down from 16.0% a year ago. Residential construction, measured by residential fixed investment, fell for the sixth time over the past eight quarters. The more cyclical home building and remodeling component–residential fixed investment (RFI)–was 3.6% of GDP, even with the previous quarter. The second component, housing services, was 12.2% of GDP, also even with the previous quarter. The graph below plots the share for housing services and RFI, along with housing’s total share of nominal GDP.

The Federal Reserve maintained the federal funds rate at a target range of 3.75% to 4% at the conclusion of its October policy meeting. Approved by a 10–2 vote, the decision followed September’s quarter-point increase. …The Federal Open Market Committee (FOMC) upgraded its assessment of economic growth, describing activity as expanding at a “strong pace,” compared with a “solid pace” in September. This change suggests greater confidence in the economy’s momentum despite elevated uncertainty. The committee also cited resilient domestic spending. Geopolitical developments remain a source of uncertainty, although Chairman Warsh was positive about the economic outlook at his press conference. …For housing, today’s hold on monetary policy avoids another increase in the policy rate that influences builder acquisition, development, and construction lending costs. However, financing conditions remain restrictive for projects already facing high development and construction expenses.

High mortgage rates and economic uncertainty continued to keep potential home buyers on the sidelines and constrain new home sales in September. New home sales declined from August and remained below year-ago levels, with year-to-date sales also lagging for 2025. Although builders have increasingly adjusted prices and offered incentives to attract buyers, elevated mortgage rates and ongoing affordability concerns continue to constrain sales activity. Sales of newly built single-family homes declined 0.6% in September to a seasonally adjusted annual rate of 676,000, following a downwardly revised August estimate, according to the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. …New single-family home inventory in September was at 476,000 units and down 2.3% from a year ago. At the current sales pace, the months’ supply of new homes stood at an elevated 8.4 months, roughly unchanged from a year ago.

The U.S. Census Bureau and the U.S. Department of Housing and Urban Development jointly announced the following new residential sales statistics for September 2026. Sales of new single-family houses in September 2026 were at a seasonally-adjusted annual rate of 676,000. This is 0.6 percent (±13.8 percent)* below the August 2026 rate of 680,000, and is 5.3 percent (±12.5 percent) below the September 2025 rate of 714,000. The seasonally-adjusted estimate of new houses for sale at the end of September 2026 was 476,000. This is 1.0 percent (±0.9 percent) below the August 2026 estimate of 481,000, and is 2.3 percent (±4.0 percent) below the September 2025 estimate of 487,000. This represents a supply of 8.4 months at the current sales rate. The months’ supply is 1.2 percent (±14.7 percent) below the August 2026 estimate of 8.5 months, and is 2.4 percent (±14.1 percent) above the September 2025 estimate of 8.2 months.

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The Federal Open Market Committee is widely expected to leave rates unchanged at today’s meeting, but markets anticipate further tightening ahead. Markets price a 90% probability of a hold ahead of the 2pm ET decision, alongside a 75% chance of a hike by December and three increases over the next 12 months. The FOMC’s recent communication has reinforced this hawkish outlook, placing greater weight on inflation risk than on labour market slack. But as today’s chart shows, rising long-term unemployment and moderating wage growth suggest that labour market pressures are easing. This supports our view that markets are too hawkish on the Fed’s policy path. Even with Warsh’s Fed placing less weight on full employment, softening wage growth should keep the economy from overheating. Why this matters: A less restrictive Fed would ease financing conditions, supporting investment and consumer spending, particularly in rate-sensitive sectors such as housing and durable goods. However, persistent inflation could delay rate cuts, keeping borrowing costs elevated and business uncertainty high.

American confidence in the economy rebounded somewhat in October as gas prices fell modestly, though it remains much more expensive to fill up a tank than last year at this time. The Conference Board said Tuesday that its consumer confidence index rose 7.5 points to 91.7 in October from 84.2 last month. September’s reading was the lowest in the board’s survey since April 2014 and below the lowest level reached during the pandemic. Yet Americans remain flustered by the economy after five years of elevated inflation. …Respondents’ views of their present situation rose by 6.9 points to 72.6 while their short-term outlook climbed 8.6 points to 120.4. …The consumer price index rose 3.7% in September compared with a year ago, according to the Labor Department, up from 3.4% in August. On a monthly basis, costs jumped 0.6% from August to September, the biggest gain in five months.

Consumer sentiment held steady this month, registering a scant one-tenth of an index point below September. Increases in sentiment among Republicans and Democrats were balanced by declines among independents. While year-ahead business conditions improved about 14%, they stand 16% less than last October’s read. This month’s decline in the Current Conditions subindex was driven entirely by buying conditions for durables, which plunged 18% on the basis of higher interest rates and rising concerns about the affordability of such purchases. Purchasing power continues to dominate consumer views of the economy. …Year-ahead inflation expectations ticked up from 4.6% last month to 4.7% this month. The current reading substantially exceeds the 3.4% seen in February before the Iran conflict began, along with all 2024 readings. Long-run inflation expectations also stepped up from 3.4% in September to 3.5%, notably higher than their 2024 range of 2.8% to 3.2%. 

CAMBRIDGE, Massachusetts  – Annual spending on home improvements and repairs is expected to remain relatively flat through late 2027, according to the latest Leading Indicator of Remodeling Activity (LIRA) from the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University. Year-over-year growth in renovation and repair spending is expected to reach just 1.5 percent by the third quarter “Retail spending on building products has been flat to negative, and remodeling permits have stagnated, which points to continued sluggish renovation activity,” said Rachel Bogardus Drew, Director of the Remodeling Futures Program at the Center. “We expect annual spending to hover around $525 billion through the third quarter of next year.” “Housing starts also continue to decline, and we are seeing persistent weakness in the broader housing market,” said Chris Herbert, Managing Director of the Center. “These ongoing headwinds could slow growth in remodeling spending even further in the quarters ahead.”

On Oct. 22, Trump signed an executive order directing the Federal Housing Finance Agency (FHFA) to create a pilot program that would cancel mortgage premiums once borrowers “have satisfied their equity requirements based on the current market value” and to make permanent its title insurance waiver pilot program. The order also creates a Task Force on Manufactured Housing Innovation, which FHFA Director Bill Pulte and HUD Secretary Scott Turner will co-chair, and requires the Agriculture and Veterans Affairs secretaries to lower interest rates for single-family home loans issued through their departments. Through the order, which Trump signed less than two weeks before the 2026 midterm elections, the White House said the president “is lowering the costs of single-family homeownership & mortgages, & removing unnecessary red tape to make homeownership more affordable for all Americans.”

The total market share of non-site-built single-family homes (modular and panelized) was just 3% of single-family homes in 2025, according to NAHB analysis of completion data from the U.S. Census Bureau’s Survey of Construction (SOC). This matched the 3% market share recorded in both 2023 and 2024. The market share of non-site-built homes has been steadily declining since the early 2000s, despite growing interest in non-site-built construction. This low market share runs counter to some media commentary that suggests recent gains in off-site construction. Nonetheless, there is potential for market share gains in the years ahead as builders seek to improve productivity in the residential construction sector. In 2025, approximately 30,000 single-family homes were built using modular (14,000) and panelized/pre-cut (16,000) construction methods, out of 975,000 completed single-family homes.

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The yield on long-term 10Y US Treasury bonds remains close to multi-decade highs even after some relief in recent days. The 10Y yield eased to around 5.1% yesterday, but remains roughly 50 bps higher than before Chair Warsh’s Jackson Hole speech as markets have priced a more hawkish Fed path. The move has already tightened financial conditions, lifting mortgage and corporate borrowing costs and raising the hurdle rate for investment. As today’s chart shows, the 100 bps rise in 10Y yields this year has been driven mainly by expectations of Fed tightening and a wider term premium, rather than by a major shift in growth or inflation fundamentals.  …Why this matters: Higher yields will continue to pressure interest-rate-sensitive areas such as housing and credit-dependent spending, but they do not necessarily imply a broad downturn. Much of the private sector remains insulated by fixed-rate borrowing, relatively low debt-service burdens and strong corporate balance sheets.

Single-family housing starts declined in September as builders faced higher financing, building material costs, and ongoing labor shortages. Overall housing starts decreased 5.2% in September to a seasonally adjusted annual rate of 1.22 million units. This pace reflects the number of housing units builders would begin over the next 12 months if September’s activity were sustained. Within the total, single-family starts decreased 4.6% to an 859,000 seasonally adjusted annual rate, the lowest level in a year. However, single-family starts were up 2.6% compared to September 2025. On a year-to-date basis, single-family starts are down 4.0%, reflecting continued challenges facing home builders. Given recent volatility, the three-month moving average provides a clearer signal, falling to 878,000 units. Multifamily starts, which include apartment buildings and condominiums, decreased 6.7% from August to September to an annualized 362,000 pace. The three-month moving average for multifamily construction has trended lower to 415,000 units, and activity is 24.9% lower compared to year-earlier levels.

The Federal Reserve’s inflation fight is running into a growing complication: The housing market is slumping even as broader price pressures persist. Housing data deteriorated further in September, according to separate reports Tuesday, adding to an already complicated policy landscape for the central bank as it contemplates its next move on interest rates. Things appear poised to get worse before they get better. If the Fed raises short-term rates as expected over the next several months, mortgage rates that are already at 7.43% could push even higher, putting a further damper on affordability. Higher home borrowing costs have coincided with a general rise in inflation and a housing shortage. “The housing market is about to go into a deep sleep unless Washington can do a 180 on its policies and make the cost of a new home more affordable,” wrote Chris Rupkey, chief economist at Fwdbonds. 

Privately-owned housing units authorized by building permits in September were at a seasonally adjusted annual rate of 1,400,000. This is 0.2 percent below the revised August rate of 1,403,000 and is 3.0 percent below the September 2025 rate of 1,444,000. Single-family authorizations in September were at a rate of 845,000; this is 4.0 percent below the revised August figure of 880,000. Authorizations of units in buildings with five units or more were
at a rate of 503,000 in September. …Privately-owned housing starts in September were at a seasonally adjusted annual rate of 1,221,000. This is 5.2 percent (±11.8 percent)* below the revised August estimate of 1,288,000 and is 7.4 percent (±11.5 percent)* below the September 2025 rate of 1,319,000. Single-family housing starts in September were at a rate of 859,000; this is 4.6 percent (±10.0 percent)* below the revised August figure of 900,000. The September rate for units in buildings with five units or more was 349,000.

Homebuilders are feeling the most pessimistic about the new-construction market in 14 years, as surging mortgage rates keep would-be buyers on the sidelines this fall. Builder confidence in new single-family home sales shed three points month over month, bringing the NAHB/Wells Fargo Housing Market Index (HMI) down to 29. This is the lowest HMI since June 2012. For context, builder sentiment has now remained below 40 for 18 consecutive months. NAHB Chairman Bill Owens ascribes the sharp pullback to soaring borrowing costs and broader economic headwinds. …Last Thursday, Freddie Mac reported that the average rate on 30-year fixed home loans held steady week over week at 7.4%, a three-year high fueled by a global bond selloff that pushed up 10-year Treasury yields. While less visible than earlier this year, the Trump Administration’s anti-immigration crackdown continues to negatively impact the residential construction industry across the U.S.

Rising mortgage rates, energy and material costs, and worsening labor and lot conditions have pushed builder sentiment to 29, a 14-year low …“Housing remains squeezed by supply-side constraints and significant affordability challenges,” said NAHB Chief Economist Robert Dietz. “Demand persists, but higher mortgage rates, elevated construction costs and weaker consumer confidence are keeping more buyers on the sidelines. As a result, buyer traffic has fallen to its lowest level since April 2012, excluding the pandemic’s onset in April 2020.” The survey found that 43% of builders cut prices in October. The average price cut remained at 6% for the seventh consecutive month. Meanwhile, 65% of builders reported using sales incentives in October, the 19th straight month at least 60% of builders have done so. …The index measuring current sales conditions fell two points to 33, the index gauging future sales expectations dropped five points to 32 and the index charting prospective buyer traffic fell five points to 18.

WASHINGTON – US single-family homebuilding and permits for future construction fell sharply in September as higher mortgage rates suppressed demand, suggesting residential investment resumed its declining ​trend in the third quarter. Single-family housing starts, which ‌account for the bulk of homebuilding, dropped 4.6% to a seasonally adjusted annual rate of 859,000 units last month, the Commerce Department’s Census Bureau said on Tuesday. Single-family building permits decreased 4.0% to a rate of 845,000 ‌units. Mortgage ​rates have surged in recent weeks, with ⁠the 30-year fixed rate ⁠averaging 7.40% last week. …Slumping ‌sales have led to a glut of unsold houses on the market, further reducing the incentive for developers to break ground on new single-family housing projects. Despite the overhang of new ⁠single-family homes, there is a national housing shortage. …Residential investment rebounded in the second quarter, also reflecting renovations. The rise followed five straight quarterly declines.

The Producer Price Index for final demand was up 1.3% in September, after rising 0.5% in August. Compared to a year ago, final demand prices were up 6.3%. The price of goods used in new residential construction (including energy) was up 1.8% over the month and up 9.7% from last year, while the price of services was up 2.2% over the month and up 11.3% from last year. …The goods component represents ~60% of the total. …Energy input prices rose 13.0% in September and were 64.1% higher than a year ago. Building material prices were up 0.4% in September and up 5.5% compared to one year ago, the highest level since 8.0% in December 2022. Outside of energy products, particleboard and fiberboard prices rose 3.5% over the month and were up 7.8%. Softwood veneer and plywood prices were up 2.7% over the month and 15.9% higher than a year ago.

U.S. kitchen cabinet sales fell 4.3% in August 2026 from a year earlier to $177.6 million, according to the Kitchen Cabinet Manufacturers Association (KCMA), whose Trend of Business report covers 47 participating manufacturers. Custom cabinet sales rose 12.2% to $54.0 million, semi-custom sales fell 9.0% to $95.0 million and stock sales fell 13.6% to $28.6 million. The number of cabinets shipped fell 11.4% to 437,697. In January–August, participants’ sales fell 6.3% to $1.41 billion. Custom sales fell 0.1% to $393.0 million, semi-custom fell 8.5% to $792.0 million and stock fell 8.3% to $228.7 million. Cabinet quantity fell 9.7% to 3.63 million. KCMA estimates the overall U.S. cabinet market for 2026 at $20.9 billion in sales and 92 million cabinets. [END]

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Last week, the University of Michigan reported that its consumer sentiment index fell below market expectations in October, reaching its lowest point since May’s record low level. In addition, US consumers are becoming increasingly pessimistic on the inflation outlook, expecting inflation to average 3.5% per year over the next five years. Yet today’s chart illustrates that breakeven inflation – the level of inflation expected by bond markets – is holding steady even as consumer inflation expectations remain far above their pre-pandemic average. This suggests that consumers remain more concerned about persistent price pressures than financial markets, potentially weighing on spending decisions. Why this matters: Elevated energy prices and higher borrowing costs are adding to the squeeze, leaving consumer demand vulnerable as confidence weakens. The October Fed meeting will test whether the central bank needs to extend its tightening cycle following September’s rate hike. We expect one further hike this year, followed by a pause as the Fed assesses the cumulative impact of tighter policy.

Higher energy prices pushed inflation to a four-month high in September, keeping pressure on the Fed as inflation has remained above its 2% target for more than five years. Gasoline prices remained the largest driver of headline inflation, accounting for over half of the monthly increase. On a non-seasonally adjusted basis, the Consumer Price Index (CPI) rose by 3.7% in September from a year ago, following a 3.4% increase last month. …The “core” CPI, excluding the volatile food and energy components, increased by 2.6% over the past twelve months. The housing shelter index, which makes up a large portion of the core CPI, rose 3.2% over the year, following a 3.0% increase last month. …The index for shelter, which makes up more than 40% of the “core” CPI, rose by 0.4% in September, following a 0.3% increase last month. The index for owners’ equivalent rent (OER) and rent of primary residence (RPR) increased by 0.3% and 0.2% over the month.