The Line: Inflation Lower than Expected in September

Today, we present the latest on inflation and share some good news about mortgage rates.

Inflation Lower than Expected in September

I’m happy to report that the long-awaited September CPI report was good news, with both the monthly and annual increases coming in below forecasts.

Here are the highlights of the report:

• Consumer prices were up 0.3% last month, and 3% over the past year.





• The biggest factor in the monthly increase in CPI was a 4.1% jump in gas prices.





• “Core” CPI, which excludes food and energy prices, also rose 3% over the past year.





• Apparel prices rose 0.7% in September but are down slightly from a year ago.

To sum up, this is good news for the economy and interest rates. While we’d certainly like annual inflation to be closer to 2%, fears of tariffs causing a spike in inflation have yet to materialize. This should keep the Fed on track to cut rates next week and in December.

Mortgage Rates Fall to Lowest Level in Over a Year

Freddie Mac reported on Thursday that the average 30-year conforming mortgage rate fell to 6.19% last week, its lowest level since October 2024. Mortgage rates are down over half a percent from the beginning of August.

This is certainly good news for the housing market and has led to a pickup in both home purchases and mortgage refinancings. Existing home sales are up 4.1% over the past year, and the September figure was the highest level in seven months. Home sales have also been helped by a rise in inventory, although the number of available homes is still below pre-COVID levels. This has kept prices high, with the median price posting 27 consecutive months of annual growth.

We also found out this week that demand for refinance mortgages is 81% higher than a year ago. Not too shabby.

The danger here is that many would-be homebuyers might choose to wait to buy, assuming that mortgage rates will continue drifting lower. While I can’t say definitively that won’t happen, I can point to recent history that proves it can. Last year, mortgage rates fell from a recent high of 7.22% at the beginning of May to a recent low of 6.08% at the end of September. A little over three months later rates were back over 7%.

The moral of the story is rates don’t always move in the direction you want. If you put off your purchase to wait for a better rate, you may miss out on a great deal. And remember that other buyers may not wait, which will reduce inventory levels and could lead to rising prices. You can always refinance, but the one thing you can’t change about your purchase is the price.