Monthly mortgage update

Hey everyone — Dan Munford here with Rate.

This is your July 2026 monthly market update.

This month, I've got some genuinely good news on inflation — and I want to break down what that means for you, whether you're buying, thinking about refinancing, or just keeping an eye on the market.

Let's get into it.

First — and this is the headline — inflation came in below expectations in June. Consumer prices actually  fell 0.4% for the month, helped largely by a nearly 10% drop in gasoline prices.

Annual inflation slowed to 3.5%. Core inflation — which strips out food and energy — held steady at 2.6% year over year. Wholesale prices also declined.

What does that mean for you? Cooler inflation takes pressure off the Fed to raise rates. They've held their benchmark rate steady all of 2026, and right now the expectation is they'll stay on pause. That's actually a good environment for mortgage borrowers — no rate hikes on the horizon.

On the housing supply side — new home construction bounced back strong in June. Housing starts jumped 19% after hitting a six-year low in May. That May number looks like it was an outlier, and June came in above expectations at 1.43 million units annualized.

That said — builder confidence is still soft. The National Association of Home Builders index dropped to 34 in July. Below 50 means more builders see conditions as poor than good. Affordability, elevated rates, and higher construction costs are all weighing on them.

The bottom line: supply is still constrained. More homes are starting construction, but it takes time — permitting, building, completion. If rates move lower and demand picks up, limited inventory will continue to support home values.

Pending home sales — signed contracts on existing homes — pulled back 5.4% in June, ending a four-month winning streak. Sales declined across all four regions and are down slightly year over year.

This shows how sensitive buyers are right now to rate changes. Higher rates over the past few months have weighed on demand. But here's the flip side — if rates soften even a little, that pent-up demand doesn't disappear. It comes back fast. We've seen it happen.

Quick economy snapshot. Retail sales rose 0.2% in June — and when you strip out gas station purchases, they were up a stronger 0.7%. Consumers are still spending, which is a healthy sign.

On jobs — new unemployment claims remain low at around 208,000, but continuing claims are elevated at 1.81 million, meaning some people are taking longer to find work. The labor market is showing mixed signals, and the Fed is watching it closely alongside inflation.

Here's the big picture. Inflation is cooling. The Fed isn't hiking rates. Builder inventory is slowly improving. And buyer demand is sensitive to rates — which means when rates move down even modestly, the market responds quickly.

If you've been waiting on the sidelines, now is a great time to understand your options. Not to rush a decision — but to be ready when the moment comes.

Let's run your numbers. Or let's just have a conversation.