Market Update – September 29, 2025

Financial Markets

Markets cooled last week as investors digested in-line PCE inflation data and eyed the potential government shutdown set for Tuesday at midnight. By Friday, September 26th, the Dow slipped 0.15%, the S&P 500 fell 0.31%, and the Nasdaq Composite declined 0.65%.

Market News:

PCE Inflation

The Federal Reserve’s preferred inflation gauge came in line with expectations for August. Headline PCE rose 2.7% year-over-year, while core PCE, which strips out food and energy, increased 2.9%. On a monthly basis, headline prices advanced 0.3% and core 0.2%. Remaining below 3% is encouraging, though the steady climb since May is a trend worth monitoring.

Source: Y-Charts

Personal Income, Spending, Saving

August data reflected another month of stability in household finances. Personal income increased by 0.4%, a healthy pace, while spending grew by a stronger 0.6%. This divergence pushed the personal savings rate modestly lower to 4.6%. The trend highlights a consumer base that remains willing to spend, with healthy income growth as well.

Source: US Bureau of Economic Analysis

New Home Sales

New home sales surged in August, rising 20.5% from the prior month and 15.4% compared to a year earlier. The sharp rebound was in part driven by a pullback in mortgage rates, with the average 30-year fixed rate falling from 6.72% at the end of July to 6.56% by late August. The median sales price also ticked higher, climbing to $413,500 from $395,100 in July, reflecting both improved demand and some firming in pricing power among homebuilders.

Source: US Census Bureau

Existing Home Sales

Existing home sales saw a less pronounced boost in August, with volumes up 1.8% from a year earlier but slipping 0.2% from July. Inventory continues to build, with 1.53 million homes on the market, an 11.7% increase from a year ago.

Supply rose to 4.6 months’ worth, signaling a gradual shift toward a more buyer-friendly market. Prices remain steady, with the median sales price up 2% year-over-year to $422,600. Compared with the sharper rebound in new home sales, the existing home market reflects a slower pace, as inventory continues to rise.

Source: National Association of Realtors

Q2 GDP Revised Up Again

Real GDP rose at an annualized rate of 3.8% in the second quarter of 2025, according to the third estimate last week. The upward revision was driven by stronger consumer spending and a decline in imports, which subtract from the GDP calculation. With positive revisions like this, markets are hopeful that with one or two additional rate cuts, the Fed can steer the economy toward a “Goldilocks” outcome—not so hot that inflation reignites, but not so cool that growth slips into recession.

Source: US Bureau of Economic Analysis

Summary

Markets slipped last week as investors weighed steady but rising inflation against signs of resilience in other parts of the economy. New home sales surged in August, while existing home sales posted only modest gains, underscoring a unique split in housing momentum. Upward GDP revisions and steady consumer income and spending pointed to economic strength, but the potential for a government shutdown in the week ahead remains a key risk to watch.

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Thank you,

Joseph M. Maas,
CFA, CFP®, ChFC, CLU®, MSFS, CCIM, CVA, ABAR, CM&AA

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