Redfin Economists’ Weekly Take: Inflation Report Unlikely to Stop Fed From Cutting Rates Next Week

Last Week In A Nutshell 

Geopolitical tensions and regional bank worries brought rates down last week as investors piled into the safety of Treasuries from the stock market.

Upcoming Attractions

• CPI report (Friday): Originally scheduled for Oct. 15, the CPI data will be released on Friday Oct. 24 to allow the Social Security Administration to calculate cost-of-living adjustments, even if the government is still shut down. Forecasters expect a firm 0.3% increase in prices relative to a month ago, corresponding to a 3.1% annual increase, keeping inflation above the Fed’s target.
• Existing home sales (Thursday): Redfin expects 4.05m (4% year over year) existing home sales seasonally adjusted at an annual rate (341k non seasonally adjusted, 3% year over year) for September.
• Delayed if government shutdown continues: New homes sales (Friday), jobless claims (state level data still available).

Last Week’s Highlights

• China/US tensions: The tensions subsided last week with the planned Oct 31 meeting between President Trump and President Xi looking like it will go ahead. But further volatility may impact markets as the meeting draws closer.
• Regional banks: Several regional banks—including Zions Bancorporation and Western Alliance Bancorporation—announced significant loan losses and fraud-linked exposures, sparking investor fears about credit quality across the sector. The turmoil has revived concerns over liquidity, funding costs and hidden “shadow-banking” exposures (non-depositary lenders) tied to regional banks, raising questions about whether the weaknesses are concentrated or symptomatic of broader banking stress.

Diving a Little Deeper

• Inflation/Fed meeting look ahead:
  • With the government shutdown pausing major economic data releases this month, the CPI report may garner even more attention than usual. It is expected that tariffs will continue to provide upward pressure on inflation while “trend inflation” (inflation net of tariff effects) is expected to soften.
  • The CPI is unlikely to stop the expected (and fully priced in) rate cut from the Fed next week, however, especially since the September jobs report is still unreleased. Without having the data to prove otherwise, the Fed will cut to ensure that the labor market does not continue to weaken.

• Redfin housing market reports:
  • Homebuyers Are Scoring the Biggest Autumn Discounts Since 2019
    • The typical home that sold last month went for 1.4% less than its final list price—the biggest September discount in six years—as a slow housing market empowered buyers to negotiate.
    • The typical home that sold also spent 50 days on the market—the slowest September pace in nearly a decade.
    • Existing-home sales inched up to the highest level in eight months, but pending sales—a more current gauge of demand—fell from both a month and a year earlier.
    • Sellers have started to pull back in response to sluggish demand; active listings fell roughly 1%.

• • 29% of U.S. Home Purchases Are Made in Cash, Essentially Flat From a Year Ago
    • 29% of U.S. homebuyers are paying in cash, down essentially unchanged from last year and down from a peak of nearly 35% two years ago due to declining mortgage rates.
    • The typical down payment is climbing, partly because in today’s expensive market, many buyers are affluent. It now sits at a record $70,000, and in percent terms, it’s 19%—up slightly from last year.
    • All-cash payments are most common in Florida, and down payments are biggest in the Bay Area and Southern California.