Weekly Mortgage & Market Update

Week of May 25, 2026 in Review

Annual inflation moved higher in April, new home sales came in below expectations, and long-term home price forecasts continued to reinforce the wealth-building potential of homeownership.

Inflation Rises in April, Still Above Fed Target

Headline Personal Consumption Expenditures (PCE) rose 0.4% in April, slightly below expectations, while annual inflation increased to 3.8%.

Core PCE, the Fed's preferred inflation measure excluding food and energy, rose 0.2% for the month. Annual core inflation edged up to 3.3% from 3.2%, remaining above the Fed's long-term 2% target.

The Federal Reserve continues balancing elevated inflation with signs of a cooling labor market. Ongoing Middle East tensions have also heightened inflation concerns due to potential impacts on energy prices. Persistent inflation supports the Fed's cautious approach to rate cuts, while softer employment data could support easing later this year.

Markets are closely watching Fed Chair Kevin Warsh's first Fed meeting on June 16–17 for additional guidance on future interest rate decisions.

Appreciation Forecasts Highlight Value of Homeownership

The Case-Shiller Home Price Index showed U.S. home prices rose 0.7% from February to March before seasonal adjustments. After seasonal adjustments, prices declined 0.2%. Overall, home values remain 0.7% higher than a year ago.

The FHFA reported home prices were essentially flat month-over-month on a seasonally adjusted basis while posting a 1.7% annual gain for homes backed by conventional loans.

Fannie Mae and Pulsenomics' Home Price Expectations Survey, which includes forecasts from more than 150 economists, real estate experts, and market strategists, projects cumulative home price growth of 14% over the next five years. A $500,000 home could gain approximately $70,000 in value during that period.

New Home Sales Ease

After two months of gains, new home sales declined 6.2% in April to a 622,000 annual pace and were 11.3% lower than a year ago. Since this report tracks signed contracts, it reflects buyers who were actively shopping during April.

According to NAHB Chairman Bill Owens, higher mortgage rates and elevated gas prices likely weighed on buyer activity despite continued housing demand.

Inventory remains relatively limited. Of the 489,000 new homes available for sale, only 122,000 were completed and move-in ready. The remainder were under construction or not yet started. Limited move-in-ready inventory could continue supporting home prices over time.

Economic Snapshot: GDP and Unemployment

The second estimate for Q1 2026 GDP showed the economy grew at an annualized rate of 1.6%, below the initial 2% estimate but above Q4's 0.5% pace. Growth was supported by AI-related investment and increased government spending, though stronger imports partially offset gains.

Initial jobless claims rose to 215,000, while continuing claims increased by 15,000 to 1.786 million. Low initial claims may reflect more workers turning to gig or freelance work, while elevated continuing claims suggest job seekers are taking longer to find employment.

Home Life Tip of the Week

Celebrate National Lemon Month with these easy Lemon Poppyseed Muffins from Allrecipes. This recipe yields 10 muffins.

Mix 2/3 cup sugar, 1/2 cup vegetable oil, 2 eggs, and the zest of 2 lemons. In a separate bowl, combine 1 1/3 cups flour, 2 tablespoons poppy seeds, 1 teaspoon baking powder, and 1/4 teaspoon salt. Alternate adding the dry ingredients with 1/2 cup buttermilk and 2 tablespoons lemon juice. Stir in 1 teaspoon vanilla extract and divide into 10 prepared muffin cups.

Bake at 350°F for 25–35 minutes. Cool completely, then drizzle with a glaze made from 2/3 cup confectioners' sugar and 2 tablespoons lemon juice.

What to Look for This Week

Key labor market reports arrive throughout the week, including Job Openings (Tuesday), Private Payrolls (Wednesday), Weekly Unemployment Claims (Thursday), and Friday's closely watched Jobs Report featuring Nonfarm Payrolls and the Unemployment Rate.

Technical Picture

Mortgage Bonds have rebounded since May 20, finding support at their 50-day Moving Average while facing resistance at their 100-day and 200-day Moving Averages.

The 10-year Treasury yield closed the week just below its 25-day Moving Average and continues trading in a tight range with support at its 50-day Moving Average.

Source: MBSHighway