Weekly Mortgage & Market Update

Week of July 27, 2026 in Review

The Federal Reserve left interest rates unchanged, annual inflation eased, and home prices continued to show strength.

Fed Holds Rates Steady, Inflation Shows Improvement

Personal Consumption Expenditures June 2026

At Kevin Warsh's second meeting as Fed Chair, the Federal Reserve voted to keep the Federal Funds Rate unchanged at 3.50% to 3.75%. This marked the fifth consecutive meeting without a rate change following a series of cuts late last year.

While the Fed Funds Rate does not directly determine mortgage rates, it influences borrowing costs throughout the economy and helps shape the broader interest rate environment.

Although the decision was widely expected, it was not unanimous. Cleveland Fed President Beth Hammack, Minneapolis Fed President Neel Kashkari, and Dallas Fed President Lorie Logan favored a quarter-point rate hike, citing concerns that ongoing Middle East tensions and higher energy prices could keep inflation elevated.

Inflation data provided encouraging news. Headline Personal Consumption Expenditures (PCE) declined 0.1% in June, matching expectations and lowering the annual inflation rate from 4.1% to 3.7%. Lower energy prices contributed to the improvement.

Core PCE, which excludes food and energy, increased just 0.1% for the month, slightly below forecasts, while annual core inflation eased from 3.4% to 3.3%. Although inflation continues moving in the right direction, it remains above the Fed's 2% target.

Home Prices Maintain Momentum

Case-Shriller Home Price Index May 2026

According to the Case-Shiller Home Price Index, U.S. home prices increased 0.6% from April to May, following strong gains in March and April. Home prices have risen a combined 2.2% over the past three months and remain 1.1% higher than a year ago.

FHFA reported a similar trend. Seasonally adjusted home prices increased 0.3% in May, while actual prices rose 0.8%, following gains of 0.7% in April, 1.0% in March, and 0.9% in February—a combined increase of 3.4% over four months. Home prices for homes backed by conventional loans were up 2.2% from a year ago.

For perspective, a $500,000 home appreciating 4% over one year would gain approximately $20,000 in value, highlighting the long-term wealth-building potential of homeownership.

At a Glance: GDP and Unemployment

The first estimate of second-quarter GDP showed the economy grew at an annualized rate of 1.5%, below expectations of around 2% and slower than the 2.1% pace recorded in the first quarter.

Growth was supported by consumer spending, business investment—particularly AI data center construction—and exports. Lower government spending and higher imports partially offset those gains.

Initial unemployment claims edged up to 197,000, while continuing unemployment claims dipped slightly to 1.782 million. The relatively low level of new claims may reflect workers shifting to gig or freelance jobs that are not fully captured in traditional employment data, while elevated continuing claims suggest many unemployed workers continue to take longer to find new employment.

Family Hack of the Week

Celebrate National Peach Month with this Peach and Blueberry Crumble from Food Network. This recipe serves 5 to 6 people.

Preheat the oven to 350°F. Peel and slice 2 pounds of ripe peaches, then toss with 2 teaspoons lemon zest, 2 tablespoons lemon juice, ½ cup sugar, and ¼ cup flour. Gently fold in 1 cup fresh blueberries, let stand for 5 minutes, and spoon into ramekins or custard cups.

For the topping, combine 1 cup flour, ⅓ cup sugar, ¼ cup brown sugar, ½ teaspoon kosher salt, ¼ teaspoon cinnamon, and ¼ pound cold butter until crumbly. Sprinkle over the fruit and bake for 40 to 45 minutes, until golden brown and bubbling. Serve warm, with or without ice cream.

What to Watch Ahead

Labor market data will be the primary focus this week. Job openings are scheduled for Tuesday, followed by private payrolls on Wednesday, weekly jobless claims on Thursday, and Friday's closely watched employment report featuring nonfarm payrolls and the unemployment rate.

Source: MBSHighway