Federal Reserve statement explained – October 2026

The Federal Open Market Committee (FOMC) of the Federal Reserve (Fed) voted today to maintain the federal funds rate in the range of 3.75% – 4%.

The short statement said the economy is strong. Consumer spending in the U.S. has been good despite geopolitical events causing elevated inflation. Meanwhile, the Committee is happy with productivity, and job gains are where they would like to see them.

What this means for mortgages and housing

In the most recent Summary of Economic Projections from the Fed, the governors called for one more rate hike of 0.25% by the end of the year. If they hold to that prediction, rates will tick up in December.

There’s also a timing aspect to this. Because mortgages are sold on the secondary market, mortgage pricing today is typically based on what traders expect the rate to be 60 days from now. This means any movement one way or the other is already priced in. For this reason, waiting on the Fed doesn’t always make sense.

The one time you might see market movements is if the traders are surprised by the direction or magnitude of the Fed’s move. While that hasn’t happened very much in recent memory, it’s always possible in times of increased uncertainty. Because markets move fast, it’s a good idea to stay on top of rates whether you’re buying or doing a refi.

If you’re not ready yet, that’s okay. Try not to focus so much on the rate as on whether the payment fits into your monthly budget and helps you accomplish your homeownership or financial goals. The rate always matters, but there’s nothing stopping you from refinancing in the future if rates drop.¹

Of course, the mortgage rate is only one piece of the monthly payment. The other big determinant is how much you borrow. One proxy for those trends is home price, so let’s take a look at a few of those indexes.

Our friends at Redfin put the median sale price at $393,895 as of September.² This is up 1.3% for the year. Meanwhile, the National Association of REALTORS^® puts the median price of an existing home at $417,500, an increase of 1.3% since last September. Finally, the median price of new construction was actually down 3.9% at $400,400.

If you like what you see and are ready to get started, you can apply online.

Economic conditions

In setting the federal funds rate, the Fed’s goal is to try to balance a dual mandate for full employment and stable prices. So let’s take a look at both to get an idea of what the Fed is confronting. We’ll begin on the inflation front.

The Fed always wants some inflation. The idea is that the threat of prices going up in the future causes people to buy now, keeping the economy going. But they also want people’s savings to mean something, so they would like to see inflation no higher than 2% annually.

Like a kid who’s found a stash of Halloween candy early, there’s too much of a good thing right now. According to the Fed’s preferred inflation metric, Personal Consumption Expenditures (PCE), inflation is up 3.4% compared to a year ago in August data. It’s 3% if you take out food and energy.

Of course, people have their own ways of interpreting the data. Fed chair Kevin Warsh has said he prefers to look at the share of PCE components running at 3% or higher. As of the August data, that was 48%, down from 52% of inputs the month prior.

It may not be the main metric, but the Consumer Price Index (CPI) is still looked at by the Fed. This shows inflation running 3.7% higher than the same time a year ago in September data. For a bunch of technical reasons, inflation tends to run hotter in the CPI than it does in the PCE.

Inflation is also about expectations. If you expect prices to go up in the future, you’re willing to pay more now. According to the University of Michigan Consumer Sentiment survey, those polled expect inflation to be up 4.7% in the year ahead. Meanwhile, expectations over the longer term are for 3.5% inflation. It’s worth noting that in recent years, expectations have run a fair bit higher than the actual CPI metrics. But the anticipation can still change purchase decisions.

Consumer expectations don’t seem to have dampened spending yet. Retail sales figures for September were up 6.3% for the year. It’s a reasonable assumption that this has to do with higher prices, but consumers are paying it. The National Retail Federation predicts holiday spending will be up 3.1% to $1.013 trillion. Have you started shopping yet?

On the labor side, the unemployment rate went up from 4.1% to 4.2% in September as compared to August. On the plus side, the labor force participation rate was up 0.2% to 61.8%. There were 29,000 jobs added to nonfarm payrolls. The economy is not going gangbusters, but it’s not in a downturn either.

While there’s no predicting the future, you can keep an eye on mortgage rates by signing up for alerts and determining the right time for you to make a move.

¹Refinancing may increase finance charges over the life of the loan.

²Rocket Mortgage is an affiliate of Redfin. You aren't required to use its lending services. Learn more at redfin.com/afba.