Redfin Economists’ Weekly Take: No End in Sight for Government Shutdown

This Week In A Nutshell

Rates have reset about 15-20 bps higher following last week’s Fed meeting. This week’s Fed speeches could help flesh out whether to expect another cut in December, but the key factor to watch is really whether there’s an end in sight for the government shutdown and the associated economic data blackout.

Upcoming Attractions

• Economic data:
  • Employment data: This is jobs week, normally capped by the all-important Friday jobs report on job creation and the unemployment rate, which will not be released as scheduled because the data was never collected in October. Also missing is the data on job openings, layoffs, and quits. We will still get the private sector ADP data on Wednesday, which is expected to rebound from last month’s negative reading based on ADP’s new weekly data. And economists will also tally up the state-level unemployment insurance claims data, which is expected to stay roughly flat.
  • ISM manufacturing index (Today): Came in lower than expected this morning, but with some bright spots in employment and new orders.
  • Consumer confidence (Friday): Expected to come in very similar to last month, meaning low consumer confidence with expectations that inflation will increase
• Fed speak:
  • There are 12 Fed speaking engagements on the calendar, with some key events being: Fed Vice Chair Bowman on Tuesday, New York Fed President Williams on Thursday and Friday, Governor Waller on Thursday, and Governor Miran on Friday. 
  • Following Chair Powell’s sharply hawkish remarks last Wednesday, these speeches will be parsed for clues on what conditions would allow the Fed to cut again in December.
• Supreme Court case on tariffs: 
  • On Wednesday, the Supreme Court will consider whether the 1977 International Emergency Economic Powers Act gives the president the power to increase tariff rates. It was used as a justification for about half of the tariffs introduced this past year (including the global minimum tariff and country-specific reciprocal tariffs imposed on April 2, the 25% tariffs on non-USMC compliant imports from Mexico and Canada, and the 20% fentanyl tariffs on China). 
  • Even if the court finds against the current administration, they could still pivot to other legal avenues to pursue the same or amended tariffs, such as Section 301, Section 232, or Section 122, which they have used to justify previous tariffs.

Last Week’s Highlights

• Fed meeting: Rates moved higher after Chair Powell went out of his way to highlight dissenting views on the Committee that made an already priced-in December rate cut far from certain. Ultimately, however, whether the December cut happens depends on if we get the missing economic data and what it says about recession and inflation risk. The Fed also announced an end to quantitative tapering on December 1 and a rotation away from mortgage backed securities into treasuries. This was widely anticipated after speeches from Governor Bowman and Chair Powell in early October previewing the change.
• Housing market:
  • NAR Existing Home Sales: Sales were up 4% from a year ago, but only because last September was especially weak. Big picture, sales continue to hover around 4 million, which is where we’ve been for three years.
  • Case Shiller Home Price Index: Home prices are up 1.6% annually, a continued deterioration from almost 5% at the beginning of the year.

Diving a Little Deeper: Government shutdown

• Forecasters are projecting even odds that the shutdown ends by mid-November as the stakes (e.g., SNAP benefits, missed paychecks, air traffic controllers, etc.) are increasing as time goes on. But the administration has blunted some of the worst impacts (e.g., military paychecks) and it’s pretty hard to see a drop dead date that forces the two sides to come together. The upshot? This could go on for quite a while.
• For the housing market, one key question is: will we get the missing economic data before the December 10 Fed meeting? If the shutdown ends by mid November, then possibly yes.If not, it’s most likely the Fed will not be working with any new official data.
• In terms of the economic impact, with the length and breadth of the shutdown (the longer shutdowns in the past have only affected a few agencies, not the entire federal government), this will definitely weigh on 2025 Q4 GDP but with a reversal for 2026 Q1 GDP after the government presumably re-opens. Similarly, for the housing market, any delayed demand will likely come back when the government re-opens.

Redfin Reports

• Bay Area Housing Market Heats Up Amid AI Boom, Return to Office
  • Pending home sales jumped 17% year over year in San Francisco last month—more than any other major metro. The typical home also sold in roughly 20 days—over twice as fast as the typical U.S. home.
• U.S. Luxury Home Prices Rose 5% in September, Twice the Pace of Non-Luxury Prices
  • The typical U.S. luxury home sold for $1,262,000 in September, up 4.8% from a year earlier to a record high for the month.
  • Luxury home sales were essentially unchanged (+0.3%) from a year earlier, showing signs of stabilization after last year’s sharp slowdown. Non-luxury home sales fell 0.3% year over year, remaining near their lowest level since at least 2013.
  • The typical luxury home took 52 days to go under contract, six days slower than last year. In comparison, non-luxury homes sold in a median of 43 days, seven days slower than  a year ago.
  • Luxury home prices rose most in West Palm Beach, FL (+14.8%) and fell most in Tampa, FL (-3.3%).
• 27% of For-Sale Homes Are Newly Built, the Lowest Share in 4 Years
  • That’s still well above pre-pandemic levels.
  • The pool of existing inventory is rising as more homeowners list and homes linger on the market. At the same time, some builders are refraining from starting new projects as they try to offload inventory.
  • House hunters who are interested in new construction may want to act now, while the pool of new homes is still fairly deep.
• Bay Area Housing Market Heats Up Amid AI Boom, Return to Office
  • Pending home sales jumped 17% year over year in San Francisco last month—more than any other major metro. The typical home also sold in roughly 20 days—over twice as fast as the typical U.S. home.

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