Weekly Mortgage & Market Update

Week of July 13, 2026 in Review

June brought encouraging inflation news, while housing data was mixed. Construction activity rebounded, but pending home sales declined.

Inflation Comes in Below Expectations

Consumer prices fell 0.4% in June, helped by a nearly 10% drop in gasoline prices, while annual inflation slowed to 3.5%.

Core inflation, which excludes food and energy, was unchanged from May and rose 2.6% over the past year.

Wholesale prices also declined from May to June, supported by lower energy costs.

Lower-than-expected inflation reduces pressure on the Federal Reserve to raise the Fed Funds Rate. While the Fed does not directly set mortgage rates, its policy decisions influence borrowing costs throughout the economy.

After cutting rates three times late last year, the Fed has held its benchmark rate unchanged throughout 2026, and policymakers are widely expected to remain on pause later this month. The Fed will continue monitoring inflation, labor market conditions, and developments in the Middle East as it evaluates future policy decisions.

New Home Construction Rebounds, but Headwinds Remain

Housing starts rebounded 19% in June after falling to a six-year low in May, reaching an annual pace of 1.43 million units and exceeding expectations.

Building permits, a leading indicator of future construction activity, declined 3% from May to an annual pace of 1.37 million units.

Builder confidence remains cautious. The National Association of Home Builders' Housing Market Index fell two points to 34 in July. Readings below 50 indicate more builders view market conditions as poor than good.

Affordability challenges, mortgage rates, and higher construction costs continue to weigh on builders. While more housing supply is needed, new inventory takes time to move through permitting, construction, and completion before reaching the market.

Pending Home Sales Slow in June

Pending home sales, which measure signed contracts on existing homes, declined 5.4% from May to June, ending a four-month streak of gains. Sales fell across all four regions and were 0.3% lower than a year ago.

Recent swings in home sales continue to highlight how sensitive buyers remain to mortgage rates and affordability. Lower rates could improve affordability and encourage more buyers to return to the market.

Quick Look: Consumer Spending and Unemployment

Retail sales increased 0.2% in June, matching expectations. Lower gasoline prices reduced gas station sales, but excluding gasoline purchases, retail sales rose a stronger 0.7%, reflecting continued consumer spending.

Initial unemployment claims remain relatively low at approximately 208,000, though some displaced workers may be turning to freelance or gig work instead of filing for unemployment benefits.

Continuing unemployment claims remained elevated at 1.81 million, suggesting many job seekers continue to face longer searches for new employment.

Family Hack of the Week

Chill a 9-by-5-inch metal loaf pan. Whisk together one 14-ounce can of sweetened condensed milk, 2 teaspoons vanilla extract (or vanilla bean paste), and a pinch of salt.

In a separate bowl, whip 2 cups cold heavy cream until firm peaks form. Fold 1 cup into the condensed milk mixture, then gently fold that mixture into the remaining whipped cream.

Pour into the chilled loaf pan and freeze for about 2 hours. Stir in your favorite mix-ins, such as chocolate chips, peanut butter, crushed cookies, or fruit, then freeze for about 3 more hours until firm.

What to Watch Ahead

It's a quieter week for economic news. Thursday's weekly jobless claims report and Friday's June New Home Sales report will be the week's primary economic releases.

Source: MBSHighway