3 Min. Market Summary
09/18/2026

 

Fed hike helps rates until Fed Chair Kevin Warsh takes the podium. Here’s the overall gist, with some positive news at the end.

The Fed raised rates this week, and at first, mortgage rates actually got a little better. That might sound strange, but if you read my update last week, it wasn’t a surprise. The market liked seeing the Fed take inflation seriously because getting inflation under control is ultimately good for longer-term mortgage rates.

Unfortunately, the improvement didn’t last. Comments from Federal Reserve Chair Kevin Warsh left the market thinking inflation could be more persistent than hoped and may take more time and effort to bring down. That pushed rates back up.

We saw more pressure Friday as markets adjusted to the possibility of additional Fed hikes, while Japan’s rate hike and oil prices added to the concern.

There are some positives for housing. Home values have remained resilient, and homeowners are still sitting on a lot of equity. So even with challenges, there are opportunities for buyers, sellers, and the Realtors helping them.

And remember, markets like this are when buyers and sellers need our expertise the most. Let’s stay focused on serving, helping people make good decisions, and finding the opportunities that are still out there.

Keep reading for a full breakdown of this week’s market-moving news:

Labor Market (Jobs)

ADP Weekly Employment Data

• ADP’s four-week average increased to 16,250 jobs per week through August 29.
• The prior week’s reading was revised slightly higher from 12,000 to 12,250.
• The latest pace points to roughly 70,000 jobs for the full month, showing some improvement from the prior week’s estimate of roughly 50,000.

Jobless Claims

• Initial jobless claims fell by 10,000 to 196,000, showing layoffs remain low.
• Continuing claims fell by 39,000 to 1.73 million.

Inflation

Fed Inflation Commentary

• Kevin Warsh said the lower inflation readings over the summer haven’t shown enough improvement in the underlying inflation trend.
• His comments pushed back against the idea that recent softer inflation readings were enough to ease the Fed’s concerns.

Economic Reports and Forecasts

Retail Sales

• August Retail Sales rose 1.2%, beating expectations of 0.8%.
• Gasoline prices rose 3.1% during the month and contributed to the increase in overall spending.
• Core Retail Sales rose 1.4%, well above expectations for a 0.4% gain.
• Back-to-school shopping likely helped the core number, but consumer spending was still stronger than expected.

Mortgage Applications

• The Mortgage Bankers Association reported mortgage rates increased to their highest level since June 2025.
• Purchase applications fell 1% for the week and were down 19% from a year ago.

Housing Starts and Builder Sentiment

• Housing starts fell to an annualized pace of roughly 1.3 million.
• Completions were running at a 1.1 million pace, down 27% year over year.
• The National Association of Home Builders Housing Market Index fell 3 points to 32.
• Current sales fell to 35, the future outlook dropped to 37, and buyer traffic remained at 23.

Pending Home Sales

• August Pending Home Sales rose 0.3%, but July was revised lower by the same amount.
• Pending sales were down 4.7% year over year as higher mortgage rates continued to weigh on housing activity.

Cotality Rental Report

• Single-family rents rose 0.4% in July and 1.8% year over year.
• Annual rent growth increased from 1.5% in June but remained below the 2.3% pace recorded in July 2025.

Federal Reserve and Monetary Policy

Federal Reserve Rate Decision

• The Fed unanimously raised rates by 25 basis points.
• Bonds initially responded favorably, with the 10-year Treasury yield falling as low as 4.94%.
• That rally faded after Kevin Warsh’s press conference as his comments pointed toward additional rate hikes.

Fed Outlook

• The updated Summary of Economic Projections showed 12 Fed members expecting one more rate hike this year.
• Four members projected two additional hikes, while two expected rates to remain unchanged for the rest of the year.
• The Fed lowered its unemployment rate projection from 4.3% to 4.1%.
• Warsh said financial conditions were not restrictive and described the latest hike as removing accommodation.

Other

Saudi East-West Pipeline

• Saudi Arabia’s East-West pipeline was shut after a drone attack, disrupting a route capable of carrying roughly 7 million barrels of oil per day.
• West Texas Intermediate oil traded above $104 per barrel early in the week following the disruption.
• By Friday, oil had eased to around $101 after Saudi Arabia said a partial repair could restore roughly half of the lost volume within days.
• A full repair was expected to take roughly three to five weeks.

Treasury Yields and Mortgage Bonds

• Friday’s update had the 10-year just under 4.99%, keeping 5% as an important level for mortgage rates and the bond market..