Real Asset Investing

Services Inflation Surges, Housing Softens: Market Update (Sept 14–26 2025)

·
Investing with contrast between a softening housing market and rising inflation.

📊 Executive Overview

Between September 14 and 26, 2025, the U.S. economy showed strength in consumption and GDP but continued weakness in housing. Inflation pressures remain concentrated in services, while investors lean toward safe havens like cash and gold. Crypto markets are also navigating new regulatory tax reporting rules that could slow inflows.

🏠 Housing & Real Estate

  • Existing-home sales fell 0.3% MoM to 3.63 million SAAR and remain 25% below 2019 levels. Condo sales are down 5.1% YoY.

  • Supply of completed new homes is now the highest since 2009, with builders cutting prices and offering incentives.

  • The “lock-in effect” is fading: only ~53% of outstanding mortgages carry sub-4% rates, versus 65% a year ago.

  • Institutional investors are pivoting away from scattered-site rentals toward build-to-rent communities.

🔗 Try the Real Estate Investing Calculator to model pricing and rate shifts.

📈 Inflation & Growth

  • Core services inflation accelerated to 3.5% YoY, while durable goods prices fell for a second month.

  • Headline PCE price index rose 2.7% YoY, above target.

  • Q2 GDP was revised up to 3.8%, and early Q3 tracking is close to 3%.

  • Personal income increased 0.4% and spending rose 0.6% in August, with real consumption expanding at a ~4% annualized rate.

🔗 Use the Budgeting Calculator to stress-test your household under higher service costs.

💼 Labor Market & Policy

  • Jobless claims dropped to 218,000 in late September, but payroll growth is slowing.

  • Fed cut rates by 25bp in September, yet long-term yields rose (10-year at ~4.14%, 30-year near 4.75%).

  • Chair Powell emphasized there is “no risk-free path”: cut too quickly and inflation reaccelerates; cut too slowly and the labor market softens.

💰 Liquidity & Safe Havens

  • Money-market funds remain highly attractive, pulling in continued inflows.

  • Investors are balancing short-duration cash instruments with hedges like gold.

  • Gold sits near record highs (~$3,769/oz) and silver trades around $46/oz, both up sharply YoY.

₿ Crypto & Digital Assets

  • Bitcoin retreated to ~$109K, down ~2% for the week. Ethereum, XRP, and Solana also weakened.

  • A $22B monthly options expiry added volatility.

  • New IRS Form 1099-DA rules begin in 2025, requiring exchanges to report crypto transactions. This provides long-term clarity but may be a short-term headwind for flows.

💡 Takeaway

  • Housing: structurally weak, inventories rising, affordability strained.

  • Inflation: sticky in services, goods disinflating.

  • Growth: surprisingly firm, supported by consumer spending.

  • Labor: cooling gradually, but not collapsing.

  • Markets: safe-haven demand favors cash and gold; crypto faces both market volatility and tax-reporting headwinds.

Investors should prepare for continued divergence: resilient growth, but with inflation risk embedded in services and fragility in housing. Defensive positioning with selective risk exposure remains prudent.

Frequently Asked Questions

What factors are contributing to the housing market's weakness in September 2025?

Factors contributing to the housing market's weakness in September 2025 include a 0.3% month-over-month decline in existing-home sales to 3.63 million SAAR, which is 25% below 2019 levels. Additionally, condo sales decreased by 5.1% year-over-year. The supply of completed new homes is at its highest since 2009, leading builders to cut prices and offer incentives. The "lock-in effect" is diminishing, with only about 53% of outstanding mortgages carrying sub-4% rates, down from 65% a year ago. These elements indicate a structurally weak housing market amid rising inventories and strained affordability.

Why are institutional investors shifting towards build-to-rent communities?

Institutional investors are shifting towards build-to-rent communities due to the current weakness in the housing market and increasing inventory levels. Existing-home sales have fallen 25% below 2019 levels, and the supply of completed new homes is at its highest since 2009. This trend allows investors to capitalize on the demand for rental housing while minimizing the risks associated with scattered-site rentals. The fading "lock-in effect," with only about 53% of outstanding mortgages carrying sub-4% rates, further incentivizes this shift as affordability becomes a pressing concern for potential homebuyers.

When is the new IRS Form 1099-DA rule effective for crypto transactions?

The new IRS Form 1099-DA rules for crypto transactions will be effective starting in 2025. These regulations require cryptocurrency exchanges to report transactions, which aims to enhance transparency in the crypto market. While this change provides long-term clarity, it may pose a short-term challenge for transaction inflows as the market adjusts to the new reporting requirements.

Reviewed by Pouyan Golshani, MD, Interventional Radiologist — May 21, 2026