Mortgage & Housing Finance: High prices and mortgage rates softening demand
The MBA 30-yr rate climbed to 6.65% for the week ending 7/10, up from 6.58% and matching May's nine-month high, reflecting lingering inflation concern and rate-hike risk even as the labor market softens. Mortgage applications fell for a second straight week (-2.7% total), with purchase applications down a sharper 7.3%, pointing to real demand erosion rather than noise.
Labor Market: still low-fire, resilient — though a shrinking labor force is doing some of that flattering work
Claims stayed constructive on the surface — the 4-week average fell to 214.25k from 219k, initial claims dropped 8k to 208k (well below the 217k expected, lowest in over two months), and continuing claims fell 16k to 1.805M, undershooting the 1.820M forecast.
Inflation: Easing but not fully correcting the recent explosions
June CPI fell 0.4% MoM, the first monthly decline since May 2020, reversing May's 0.5% increase and driven primarily by a 5.7% drop in energy prices — though that follows a combined 2% run-up over March-May, so it's a dent, not a reversal. YoY CPI eased to 3.5%, its first decline since February, with energy up just 15.7% YoY versus 23.5% in May as the temporary ceasefire cooled prices. Core CPI held at 0.2% MoM (first flat print since January 2021, undershooting the 2% expectation) and slipped to 2.6% YoY from a seven-month-high 2.9% in May, aided by shelter easing from 3.4% to 3.3%.
Housing Activity: Starts Surge, Demand Doesn't: Housing's Multifamily Mirage and hopefully returned affordability.
Pending home sales dropped 5.4% MoM in June, snapping a four-month winning streak, with the Midwest hit hardest at -8.9% and the YoY figure slipping 0.3% — NAR pins it on record-high prices meeting the highest rates in a year, squeezing first-time buyers especially. Housing starts told a messier story: up 19% MoM to 1,427k, rebounding from May's 15.2% slide, but the composition matters — multifamily surged 76.3% to 513k after a 41% plunge, while single-family starts edged down 0.2% to 895k for a third straight monthly decline as prices and rates weigh on that segment specifically.
Consumer: Sentiment Rebounds, Spending Cools: Consumers Send Mixed Signals
Retail sales rose just 0.2% MoM in June, the slowest pace in five months, though that's largely a gas-price effect — ex-gasoline sales were up 0.7%, and the control group (feeds into GDP) rose 0.5%. YoY retail sales were up 6.7%, trailing an upwardly revised 7.3% in May. Sentiment surprised to the upside: Michigan's preliminary July read jumped to 54.4 (vs. 51 expected), the second straight monthly gain off May's record low and the best print since February, with both current conditions and expectations improving and inflation expectations easing to 4.2% from 4.6%.