This Market Update is written by our Capital Market specialists each week to bring you insight into what's happening in the market and how it may affect mortgage rates and real estate trends.
Market Commentary:
The Federal Reserve's unanimous decision on September 16 to raise the benchmark federal funds rate by 25 basis points to a target range of 3.75% - 4.00% dominated economic discussion this week. This marks a major policy shift, the Fed's first rate increase since July 2023 driven by persistent inflation pressures and elevated energy prices.
Labor markets remain steady with unemployment holding at 4.1%, while persistent inflation keeps near-term rate cut expectations off the table. High borrowing costs are stalling rate-and-term refinances. Active listings have rebalanced to roughly 1.62 million, but weakened buyer purchasing power has driven price cuts on over 40% of active listings. Seller concessions and 2-1 temporary rate buydowns to reduce initial buyer payments are great strategies. Focus should be on setting realistic upfront pricing rather than relying on price drops later.
FedWatch: Target rate (in bps) possibilities, according to the CME Group (as of 09/17/2026– 12:00 PM EST):
Builder Sentiment Falls on Higher Interest Rates and Costs
Value of Household Real Estate Assets Approaches $50 Trillion
Single-Family Permitting Declines Through July as Multifamily Activity Remains Stronger – Eye On Housing
U.S. Migration Patterns
Hawkish Hike
To no one’s surprise, the Fed raised rates 25bps. The more important issue: what follows. Since the Fed began using fed funds as its primary method for shaping rates back in the 1990s, only once has there ever been a one-and-done rate hike. Moreover, the press release read rather hawkish as it mentioned inflation being “elevated” and not being driven exclusively by energy. Two more hikes before this cycle ends. - Elliot Eisenberg, Economist
News You Can Use:
· What Kevin Warsh said about the Fed’s first rate hike since 2023 | CNN Business
· Fed approves interest rate hike, signals one more to come this year
· What the Fed rate hike likely means for you | PBS News
· What the Fed's Rate Hike Means for Housing | Zillow Research
· Iran war impact: Oil prices, Treasury yields squeeze U.S. consumers
· States With Highest Poverty Rates Clustered in the South
· Homebuilding Continues to Lose Ground, as Permitting Slips to a Post-Pandemic Low | Zillow Research
*Communication is intended for Industry Professionals only and not intended for Consumer Distribution
Interest rate and annual percentage rate (APR) are based on current market conditions as of 09/17/2026, are for informational purposes only, are subject to change without notice and may be subject to pricing add-ons related to property type, loan amount, loan-to-value, credit score and other variables. Estimated closing costs used in the APR calculation are assumed to be paid by the borrower at closing. If the closing costs are financed, the loan, APR and payment amounts will be higher. Contact us for details. Additional loan programs may be available. Accuracy is not guaranteed, and all products may not be available in all borrower's geographical areas and are based on their individual situation. This is not a credit decision or a commitment to lend. Actual interest rate, APR, and payment may vary based on the specific terms of the loan selected, verification of information, your credit history, the location and type of property, and other factors as determined by HomeServices Lending, LLC. Not available in all states. Rate is as of 09/17/2026 and is subject to change at any time without notice. Opinions, estimates, forecasts, and other views contained in this document are those of Freddie Mac’s economists and other researchers, do not necessarily represent the views of Freddie Mac or its management, and should not be construed as indicating Freddie Mac’s business prospects or expected results. Although the authors attempt to provide reliable, useful information, they do not guarantee that the information or other content in this document is accurate, current, or suitable for any particular purpose. All content is subject to change without notice. All content is provided on an “as is” basis, with no warranties of any kind whatsoever. Information from this document may be used with proper attribution.
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