From the Desk - Economic Commentary
Scott Goedken, Institutional Strategies Director - 10/20/2026
Housing remains under pressure. According to this morning's U.S. Census Bureau and Department of Housing and Urban Development release, September housing starts fell to their lowest level in four months, while single-family starts and permits both declined. With mortgage rates near cycle highs and homebuilder sentiment at its weakest level in more than a decade, today's report adds to the growing evidence that residential construction is slowing. Housing starts declined 5.2% during the month to an annualized rate of 1.221 million units, while building permits slipped 0.2% to 1.400 million.
The Philadelphia Fed Nonmanufacturing Business Outlook Survey was more constructive. Activity, new orders, and sales all improved from September levels. At the same time, firms reported another increase in input cost pressures, with the prices paid index reaching its highest level since April. Future business expectations also softened, suggesting firms remain cautious despite better current conditions.
Financial markets are mixed this morning. The Dow Jones Industrial Average is higher, while the S&P 500 is little changed and the Nasdaq Composite is lower as selling pressure in technology and AI-related shares continues. Treasury yields have moved lower following today's housing data, while WTI crude oil is trading near its highest level in a month and continues to push toward its three-month high.
The combination of rising energy prices and persistent input cost pressures is an unwelcome development for the inflation outlook. Fed funds futures continue to assign a high probability that the Federal Reserve leaves rates unchanged at next week's meeting, though expectations for additional tightening later this year and into early 2027 remain in place.
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