MARKET UPDATE: 11-02-2026

Fed Holds Steady, Inflation In Line

The Fed left its benchmark interest rate unchanged, while inflation came in as expected. In housing news, new home sales edged lower, while nationwide home prices continued to rise. Here’s what you need to know.

  • Fed Holds Rates Steady, PCE Inflation Meets Expectations
  • New Home Sales Dip, but Home Price Growth Holds Up
  • GDP and Unemployment: The Latest Read
  • Family Hack of the Week
  • What to Watch Ahead

Fed Holds Rates Steady, PCE Inflation Meets Expectations

The Federal Reserve voted to keep its benchmark Federal Funds Rate unchanged at 3.75% to 4%. This follows a quarter-point hike at the Fed’s September meeting.

Keep in mind that the Fed Funds Rate is the overnight borrowing rate for banks and is not the same as mortgage rates.

The decision to hold rates steady was widely expected, but the vote was not unanimous. Cleveland Fed President Beth Hammack and Governor Lisa Cook dissented in favor of a quarter-point rate hike. When the Fed raises rates, it generally aims to slow economic activity and ease inflationary pressure.

The latest inflation report, released the day after the Fed meeting, came in broadly in line with expectations though still above the Fed’s target. Headline Personal Consumption Expenditures (PCE) inflation rose 0.5% in September, bringing the annual rate to 3.6%. Core PCE, which excludes food and energy, rose 0.3% for the month, with annual core inflation at 3.1%.

The Dallas Fed’s Trimmed Mean inflation measure, which filters out unusually large price moves to give a clearer picture of underlying inflation, was 2.3% over the 12 months through September – much closer to the Fed’s 2% target.

Bottom line: The Fed is balancing the need to bring inflation back to 2% with its goal of maintaining a healthy job market. The path of future rate decisions will depend on incoming inflation and labor market data.

New Home Sales Dip, but Home Price Growth Holds Up

New home sales (signed purchase contracts) slipped 0.6% in September to an annualized pace of 676,000, down slightly from July’s revised eight-month high of 680,000. Still, sales beat expectations of 650,000. Compared with a year earlier, sales were down 5.3%.

The median price of a new home fell 3.9% from a year earlier, prompting some headlines about falling home prices. However, the median is simply the midpoint of all homes sold: half sold for more and half sold for less. It can change depending on the types of homes buyers are purchasing.

In September, sales of homes priced between $300,000 and $400,000 increased notably from a year earlier, while sales of homes priced above $600,000 declined. This shift toward lower-priced homes helped bring down the median price.

Bottom line: A lower median sales price doesn’t necessarily mean home values are falling. Broader measures of nationwide home prices continued to rise. The Case-Shiller index showed national home prices up 0.3% from July to August after seasonal adjustment, with annual growth accelerating to 2.1% from 1.9% in the previous report.

The Federal Housing Finance Agency (FHFA) also reported a 0.3% monthly increase in seasonally adjusted home prices in August. Prices for homes backed by conventional loans rose 2.4% from a year earlier.

GDP and Unemployment: The Latest Read

The first estimate of third quarter GDP shows the economy grew at an annualized rate of 3.4%, up from 2.2% in the second quarter.

Growth was supported by consumer spending, government spending, and business investment, including continued investment in AI data centers. A decline in exports partly offset these gains, while higher imports also weighed on growth because imports are subtracted when GDP is calculated.

On the jobs front, initial unemployment claims held relatively steady at around 194,000, suggesting layoffs remain limited. However, claims don’t capture the full picture of the labor market, as some workers may turn to gig or freelance work when traditional jobs are harder to find.

Meanwhile, continuing claims edged down to 1.7 million, though fewer people receiving ongoing unemployment benefits doesn’t necessarily mean more people are finding jobs. Some may have exhausted their benefits.

Family Hack of the Week

November is National Raisin Bread Month, making it the perfect time to enjoy this Raisin Bread Pudding, courtesy of Allrecipes. This recipe yields 12 servings.

Preheat your oven to 350 degrees Fahrenheit. Tear 6 slices of day-old raisin challah or brioche into small pieces and place them in an 8-inch square baking dish. Drizzle 2 tablespoons of melted unsalted butter over the bread.

In a medium bowl, whisk together 2 cups milk, 3/4 cup sugar, 4 large eggs, 1 teaspoon cinnamon, and 1 teaspoon vanilla until well combined. Pour the mixture over the bread, then gently press the bread down with a fork until it is evenly covered and soaked.

Bake for about 45 minutes, or until golden brown and the top springs back when lightly pressed. Serve warm with your favorite vanilla ice cream.

What to Watch Ahead

Labor market data will be in focus, starting with Tuesday’s job openings report, followed by private sector payrolls on Wednesday and weekly jobless claims on Thursday. The week wraps up with Friday’s closely watched employment report, which includes nonfarm payrolls and the unemployment rate.