| This week the June CPI report was released. It provided encouraging signs that inflation pressures may be easing, as June consumer inflation came in lower than expected and producer prices also moderated. Retail sales remained positive, suggesting consumers continue to spend despite higher borrowing costs. Other data showed improving consumer sentiment reflected the benefit of lower gasoline prices. We need to keep in mind that oil prices were near $117 a barrel in May, dropped to $71 a barrel in June, but has now rebounded to $88 a barrel as tensions have flared back up. Although several Federal Reserve officials continue to express concerns about inflation, markets still expect the Fed to leave interest rates unchanged at its upcoming meeting. For real estate, the combination of moderating inflation and a pause in rate hikes would be welcome news, although mortgage rates remain elevated and continue to challenge affordability.
Mortgage rates – Every Thursday, Freddie Mac publishes interest rates based on a survey of mortgage lenders throughout the week. The Freddie Mac Primary Mortgage Survey reported that mortgage rates for the most popular loan products as of July 16, 2026, were as follows: The 30-year fixed mortgage rate was 6.55%, up from 6.49% last week. The 15-year fixed was 5.93%, up from 5.82% last week. The graph below shows the trajectory of mortgage rates over the past year.
Consumer prices rose 3.5% annually in June – The Consumer Price Indexreleased this week. It showed that consumer prices for all goods increased 3.5%year-over-year in June, down from a 4.2% annual increase in May. The drop was mostly attributed to a drop in oil prices. While this was below analysts’ expectations it was still well above the 3-year low 2.4% inflation rate in February 2026 before the war began. The Core Consumer Price Index, which excludes food and energy, came in at 2.6% annually, down from 2.9% in May.
Stock markets – Stocks finished the week mixed but generally resilient, with the S&P 500 posting another weekly gain as investors looked ahead to next week’s June CPI report and the start of second-quarter earnings season. The Dow Jones Industrial Average closed the week at 52,146.42, down 0.9% from 52,637.01 last week. It is up 8.5% year-to-date from 48,063.29 on December 31, 2025. The S&P 500 closed the week at 7,457.69, down, 1.6% from 7,575.39 last week. The S&P is up 8.9% year-to-date from 6,845.50 on December 31, 2025. The Nasdaq closed the week at 25,520.24, down 2.9% from 26,281.61 last week. It is up 9.8% year-to-date from 23,241.99 on December 31, 2025. U.S. Treasury Bonds – Treasury yields moved higher during the week as bond investors remained cautious about inflation and the Federal Reserve, keeping mortgage rates under upward pressure heading into next week’s CPI report. The 10-year treasury bond closed the week yielding 4.55%, almost unchanged from 4.56% last week. The 30-year treasury bond yield ended the week at 5.06%, unchanged from 5.06% last week. We watch bond yields because mortgage rates follow bond yields. |
