Overview: The Housing Market in October 2025
The Federal Reserve's rate cut in October, along with a decline in the Treasury yield, is indirectly affecting the mortgage interest rates. Mortgage rates reached their lowest level since September 2024, and together with lower home prices and improved affordability, this created a strong momentum for new buyers to enter the market. Indeed, October's data saw a rise in both existing and pending home sales. The Mortgage Purchase Index showed a decline in housing demand. However, this is just the cyclical nature of the housing market, as it tends to cool down as Americans prepare to celebrate Thanksgiving and the winter holidays. Usually, inventory is lower during the winter months because fewer people are available to list their homes.
In terms of the labor market, September's job gains were reassuring, suggesting that the economy is not slipping into a recession. Nevertheless, the market is still weak as the average monthly gains are still lower than last year. The Federal Reserve's Open Market Committee is waiting for the next data release (which will only be available in mid-December and will reflect the employment situation in November) to make the next decision about a final rate cut before the end of the year.
At its October meeting, the Federal Open Market Committee (FOMC) announced a 0.25 percentage point cut to the short-term interest rate, lowering the target range to 3.25%-4.0%. As a reminder, the Committee can cut or increase the rate to help the economy achieve the goals of maximum employment and 2% inflation.
In September, a total of 119,000 jobs were added to the U.S. labor market but overall showed little change since April 2025. Job gains continued to trend up in health care, food services, drinking places, and social assistance. Job losses continued in warehousing and in the Federal government. In construction, employment showed little or no change at all over the month.
- September 2025: 4.4%
- August 2025: 4.3%
- September 2024: 4.1%
Total housing inventory was at 1.52 million in October, down by 0.7% from September but up by 10.9% from October 2024. October's inventory was equivalent to 4.4 months' supply of unsold inventory, down from 4.5 in the previous month and up from 4.1 months one year ago.
In July, privately-owned housing starts decreased to a seasonally adjusted rate of 1.31 million. This decrease was 8.5% below the revised July estimate and 6.0% below the revised August 2024 estimate. There were 890,000 single-family starts in August, down by 7.0%% from 957,000 in July.
Respectively, another measure of housing construction, building permits issued, decreased to 1.33 million in August. Permits were down 3.7% from July and 11.1% from August 2024. Single-family authorizations were at 856,000, 2.2% below the revised July rate of 875,000.
