Editor’s note: Econ Review is a roundup of the housing and economic market data reports released during the month.

As the winter slowdown draws closer, the housing market remains in a sticky spot as the economy continues to face challenges trickling down from the Iran War. Now moving toward the end of 2026, the question remains whether we’ll begin to see a housing market recovery next year. 

Let’s take a look at what the housing and economic data reports released in October can show us: 

Home sales

Existing-home sales saw a slight boost as the summer season finally came to a close, up 1.5% month-over-month in the latest report. Some regions picked up as well, with the South and West recording month-over-month gains.

Despite a slight monthly uptick, National Association of Realtors® Chief Economist Lawrence Yun noted in the report that the end of summer—August and September—marked “the two slowest months for home sales this year.” 

As such, existing-home sales remained depleted year-over-year by 2.2%. All four regions also saw losses year-over-year.

Ali Wolf, chief economist at NewHomeSource and Zonda, said that the uptick was not an indicator of marker recovery as “supply is still pulling most of the weight here.”

“Today’s report shows a market clearing accumulated listings, not a wave of buyers coming in,” she continued. “And, this is the last clean read before mortgage rates shot up to over 7%, meaning next month we’ll start to see the impact on buyer activity.”

A positive note in the report was a slightly increased share of first-time buyers, as Realtor.com® Chief Economist Danielle Hale said that the market is “past the worst of the starter-home supply crunch nationwide, which may help entry-level buyers gain a foothold.”

In addition, existing-home inventory remains on the rise, growing 1.9% month-over-month and 4.6% year-over-year.

Construction challenges kept new-home sales muted for another month, falling 0.6% month-over-month and 5.3% year-over-year. Additionally, last month’s sales numbers were also revised downward by about 0.6%, dimming activity further.

“Builders continue to offer incentives and adjust pricing to attract buyers, but elevated mortgage rates and high home prices are limiting the number of households that can afford to purchase a home,” said National Association of Home Builders (NAHB) Chairman Bill Owens.

Wolf also predicted a potential increase in new-home sales in the fall and winter due to the incentives being offered by builders to “meet their year-end goals,” making it the “prime season for new home shopping.”

Looking ahead at potential activity, mortgage rates back up in the 7% range are starting to weigh on the market as pending home sales dropped 7.3% month-over-month and 11.3% year-over-year. All four regions also experienced declines on both a monthly and annual basis.

Realtor.com Senior Economist Hannah Jones noted that elevated rates are definitely “deteriorating” the market, and “this month’s deep freeze in buyer activity could persist until affordability improves.”

“The local data confirms that higher rates are impacting buyers throughout the country, even in markets that have shown consistent strength,” she continued.

However, Jones added that even though rates are straining buyer budgets, “the market is becoming more hospitable for those who can afford to participate.”

“Lower prices, a slower pace and more price reductions may help offset some of the impact of higher rates,” she concluded.

Home prices

The latest Case-Shiller Index saw real home values decline for the 15th straight month as inflation continues to outpace home-price growth.

Home-price growth did see a slight uplift this month, advancing from 1.9% year-over-over growth last month to 2.1% in the latest report. The 10- and 20-City Composites were also both up 0.2% in their annual gains to 3.6% and 2.7%, respectively.

Rebecca Kaufman, associate director of Commodities at S&P Dow Jones Indices, did note a discrepancy in seasonally adjusted and non-seasonally adjusted prices (declines vs. rises, respectively), which she explained is indicative of a “post-summer slowdown” that “is obscuring some underlying strength in home prices.”

Kaufman also cautioned that affordability will still face challenges as inflation rises due to gas, oil and energy prices rising.

“Households continue to face elevated costs alongside persistently high home prices,” she said.

As for existing homes, the median existing-home price clocked in at $417,500, which is a 1.3% annual increase. This is a reversal from last month’s 1.2% annual fall, but still a lower rate of growth than historical peaks.

Housing construction

As previously mentioned, housing construction’s challenges have kept the industry segment fairly muted throughout the year, and this month was no expectation.

The latest New Residential Construction report saw housing starts drop 5.2% month-over-month and 7.4% year-over-year, led by 7.2% month-over-month and a whopping 25.9% year-over-year fall in multifamily starts (which had previously been performing well). Single-family starts also remained diminished with a 4.6% fall month-over-month, but did see a slight year-over-year improvement of +2.6%.

Danushka Nanayakkara-Skillington—NAHB’s assistant vice president for forecasting and analysis—noted that this month’s data “align(s) with our forecast of lower production in 2026, with further declines expected in 2027 as rates stay elevated and material costs rise.”

Despite starts remaining diminished, housing completions did see a slight month-over-month uptick by 2.2%. The slight monthly boost is likely due to a 14.9% month-over-month boost in multifamily completions. However, overall completions were still well down year-over-year by 14%, as single-family completions were down across the board and multifamily completions were down year-over-year.

In addition, the fall in multifamily starts may not last for long, as multifamily permits were up 5.9% month-over-month and 1% year-over-year. Overall, permits had the smallest fall in the report, down only 0.2% month-over-month and 3% year-over-year.

“The market is not conducive to building right now, and the diminished starts and completions figures make that clear,” added Realtor.com Senior Economist Joel Berner. “However, the relative resiliency of new home permitting shows that builders see these conditions as temporary.”

With construction reports still coming in well below historical norms, builder confidence remains fairly shaken. The latest Housing Market Index actually saw builder confidence tank to a 14-year low, clocking in at 29 (out of 100, with 50 being the baseline).

The “Trump administration’s efforts to advance regulatory reform” are, according to NAHB Chairman Owens, “helping to ease some of the cost pressures (builders) face.” Nevertheless, the administration’s immigration crackdown is “causing construction delays and discouraging legal workers from reporting to work.”

Price cuts and incentives are still being heavily used by builders to sell new homes, with the share of builders enacting price cuts actually peaking to a six-year high at 43%.

The overall economy

The labor market has seen a lot of resilience in recent months, but this month’s jobs report unfortunately weakened and lost some ground.

The unemployment rate—which has been unchanged at 4.1% for the past two months—saw a slight uptick to 4.2%. Only 29,000 jobs were added this month, which is below economists’ expectations in the range of 80,000.

Realtor.com Senior Economist Jake Krimmel called the report a “clear miss,” but noted that it probably wouldn’t change that much when it came time for the Federal Reserve’s Open Market Committee (FOMC) meeting.

“Despite tepid September job growth, unemployment remains low, so in short, this is no labor disaster that would pull the FOMC’s focus off inflation,” he continued.

Krimmel also pointed toward the downward revisions in added jobs over the past two months, explaining that the unemployment rate’s increase is not as severe as people may believe.

“Layoffs haven’t picked up, and jobless claims have been falling, so the low-hire, low-fire market is likely to stay entrenched as we head into 2027,” he said.

Speaking of inflation, the latest Consumer Price Index saw an increase as inflation remains elevated, now clocking in at 3.7% and core inflation at 2.6%. Krimmel noted that these figures “came in slightly hotter than expected,” and potentially point to a Fed rate hike by December.

The Personal Consumption Expenditures price index also recorded an increase this month, hitting 3.6% annual inflation and 3.1% core annual inflation. Navy Federal Chief Economist Heather Long said that “inflation is back near a 3-year high,” which is “largely due to war in Iran.”

Long also identified other major reasons for inflation—a “(b)ig rise in goods prices,” “service sector inflation” and “sideways” housing inflation as indicative of rising core inflation in general.

The Fed ended up not making any changes to rates, despite many predictions leaning in that direction. However, further rate hikes remain on the table.

Notably, Realtor.com Chief Economist Hale anticipated another two to three hikes over the next six to eight months, which would mean a high-end rate range of 4.5% to 4.75%.

Consumer opinions were slightly mixed this month, as sentiment remained flat while confidence saw an increase. 
Sentiment’s lack of movement was largely attributed to the prolonged conflict with Iran. Also, despite little movement this month, sentiment has honed in on a 74-year low in the survey’s history.

Confidence, on the other hand, grew due to growth in positive perceptions of current and expected business conditions. This was attributed to the brief recovery seen in gas prices from September to October. Confidence does, however, remain on the downward trend it has been on over recent years, the report noted.

Looking ahead, the Leading Economic Index registered flat this month as the economy remains challenged due to the aforementioned elevation in inflation. The report was also not indicative of any recession in the coming months.

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