After supposedly “unexpected” September inflation reports left the Consumer Price Index (CPI) up an (underestimated) 3.7% for the past year and producer prices (PPI) up 6.8%, mortgages will become more expensive and home sales in the United States even more solidly frozen. Fannie Mae and Freddie Mac, the national mortgage credit institutions, had forecast a 30-year mortgage rate of 6.8% in the fourth quarter of 2026 and, Polyanna-like, 6.7% for 2027. Now, their forecast is 7.4% in the fourth quarter of 2026 (it is already 7.46%), and 7.5% for all of 2027.

The rate of existing home sales as of September is 3.98 million/year, below a kind of “Maginot Line” of 4 million in a market which, in prior decades, was nearly always higher than 5 million/year. It is likely to get worse. The chief economist of the National Association of Realtors (NAR) told reporters on Oct. 13, “The fourth-quarter outlook for closing activity will clearly be down, maybe even measurably down. We are seeing more delays in the contracts with these rising interest rates.”