MARKET UPDATE: 10-5-2026

Week of September 28, 2026 in Review

Inflation surprised to the downside, the BLS jobs report came in well below forecasts, and home price appreciation remained resilient. Here's what you need to know.

  • Inflation Readings Below Expectations
  • September Jobs Report Comes in Soft
  • Private Sector Hiring Rebounds
  • Additional Labor and Economic Highlights
  • National Home Values Keep Rising
  • Family Hack of the Week
  • What to Watch Ahead

Inflation Readings Below Expectations

Headline Personal Consumption Expenditures (PCE) inflation rose 0.3% in August, while the annual inflation rate held at 3.4%, below the 3.7% estimate. Core PCE, which excludes food and energy prices, rose 0.2% for the month, with annual core inflation holding at 3%, also below the 3.3% forecast.

The Dallas Fed’s Trimmed Mean inflation measure, which filters out unusually large price moves, showed underlying inflation at 2.2% over the past year – much closer to the Fed’s 2% target.

Bottom line: Inflation is still above the Fed’s 2% target, but some measures suggest underlying price pressures are more moderate than the headline numbers indicate. That matters because the Fed is trying to balance bringing inflation back to 2% with maintaining a healthy job market.

At its September meeting, the Fed raised its benchmark Federal Funds Rate by 25 basis points in a unanimous decision, pointing to elevated inflation as a key reason for the move. When the Fed raises its benchmark rate, it generally aims to slow economic activity and put downward pressure on inflation. Keep in mind that the Federal Funds Rate is the overnight borrowing rate for banks and is not the same as mortgage rates.

The Fed has two meetings remaining this year, on October 27-28 and December 8-9, and upcoming inflation reports will be a crucial factor in its policy decisions.

September Jobs Report Comes in Soft

September hiring was well below expectations, with the economy adding just 29,000 jobs compared with roughly 90,000 expected. The unemployment rate rose from 4.1% to 4.2%.

Bottom line: Monthly jobs data from the BLS can be volatile and is often revised as more information becomes available. September’s weak job growth came alongside downward revisions to earlier months. July’s payroll estimate was revised lower by 31,000, resulting in a net loss of 10,000 jobs for the month. August’s originally reported 162,000-job gain was also revised lower, to 133,000. Together, the July and August revisions reduced previously reported job growth by 60,000.

Several Fed officials, including Governors Michelle Bowman and Philip Jefferson and New York Fed President John Williams, have recently said they want to see more data before making further moves on interest rates. Their comments come as expectations for a rate hike at the Fed’s October meeting have fallen significantly.

Private Sector Hiring Rebounds

Private employers added 90,000 jobs in September, above expectations of about 70,000, according to ADP. Hiring accelerated for the first time since May, following a three-month slowdown. Among workers who changed jobs, pay rose an average of 7.3% over the past year, compared with 4.4% for those who stayed with their current employer.

Bottom line: The ADP report provides a somewhat different picture from the BLS report, with private sector hiring rebounding in September. The education and health services sectors continued to account for much of the job growth, as they have in recent months, reflecting longer-term demand for workers as the population ages.

Additional Labor and Economic Highlights

Job openings totaled 7.08 million in August, slightly below expectations of 7.2 million. The headline figure may somewhat overstate the number of unique opportunities available to workers because some remote jobs are posted in multiple locations.

New unemployment claims edged down to 197,000, while continuing claims fell to 1.7 million. Initial claims remain relatively low by historical standards. Continuing claims have also declined from recent highs, although some of that decrease may reflect benefits expiring rather than workers finding new jobs.

Early seasonal hiring also showed signs of weakness. Challenger, Gray & Christmas reported 90,787 announced hiring plans in September, the lowest September total since 2011.

GDP growth was stronger than previously estimated. The final estimate of second quarter GDP showed the economy grew at an annualized rate of 2.2%, up from the previous estimate of 1.5%. First quarter growth was also revised higher, from 2.1% to 2.5%. Growth was supported by consumer spending, investment (including continued investment in AI data centers), and exports. Higher imports weighed on GDP because imports are subtracted when calculating economic growth.

National Home Values Keep Rising

National home prices rose 0.1% from June to July, according to Case-Shiller, bringing the gain from March through July to nearly 3%. That’s a resilient pace of growth, especially as mortgage rates began rising during the period. Overall, home prices are up 1.9% from a year ago.

A separate report from the Federal Housing Finance Agency (FHFA) found that seasonally adjusted home prices rose 0.3% in July. Prices for homes backed by conventional loans were up 2.6% from a year ago.

Bottom line: Even modest home price gains can add up over time. For example, a $500,000 home appreciating 3% in a year would gain roughly $15,000 in value. Over time, that appreciation can become a meaningful part of a homeowner’s overall wealth.

Family Hack of the Week

Kick off National Cookie Month with these easy and delicious Chocolate Chip Oatmeal Cookies, courtesy of Food Network. This recipe makes about 3 dozen cookies.

Position two oven racks in the middle and upper thirds of the oven and preheat to 350 degrees Fahrenheit.

In a medium bowl, combine 1 cup all-purpose flour, 1/2 teaspoon baking powder, 1/2 teaspoon baking soda, 1/4 teaspoon salt, 2 cups old-fashioned rolled oats, and 1/2 cup coarsely chopped pecans.

In a large bowl, beat 8 tablespoons (1 stick) room-temperature unsalted butter, 1/2 cup lightly packed brown sugar, and 1/2 cup granulated sugar for about 30 seconds, until blended. Beat in 1 egg, then drizzle in 1/4 cup maple syrup and 1/2 teaspoon vanilla and mix until well incorporated. Slowly add the dry ingredients and mix just until combined, then stir in 3/4 cup semisweet chocolate chips.

Drop walnut-sized balls of dough onto nonstick or parchment-lined baking sheets, spacing them about 3 inches apart. Using moistened fingers, gently flatten each cookie. Bake for about 9 minutes, rotating the baking sheets once for even browning. The cookies are ready when lightly browned on top. Transfer the baking sheets to a wire rack and let the cookies cool.

What to Watch Ahead

A much quieter week is ahead, highlighted by the minutes from the Fed’s latest meeting on Wednesday and jobless claims data on Thursday.

Author: Abdel Khawatmi with PRMG Got Mortgages | 201-679-0422