Core inflation rose 2.9% annually, while shelter costs showed a 3.8% increase year over year, reflecting a cooling trend since August 2024. This inflation report negatively impacts the real estate industry, exacerbated by high mortgage rates. Federal Reserve Chairman Jerome Powell remains cautious about interest rate cuts due to potential tariffs impacting inflation. Specific sector price data indicates the influence of tariffs. As financial stress heightens for prospective homebuyers, a Fed rate cut appears unlikely in July, signaling challenges ahead as potential tariffs on several countries loom.
Core inflation, which removes volatile food and energy costs, rose 2.9% annually. The rise in shelter costs continues to cool, however, registering a 3.8% rise year over year. The pace of inflation for shelter has decreased every month since August 2024.
Federal Reserve Chairman Jerome Powell has taken a cautious approach to an interest rate cut, often citing the potential for Trump's tariffs to reignite inflation. Today's inflation report is not good news for the housing market.
The headline inflation number gets most of the attention, it is the price data for specific sectors that will give us an indication that tariffs and announcements about tariffs are having an impact on inflation.
Sagent CEO Geno Paluso stated, June Core CPI rose less than expected for the fifth straight month, which may lower rates and provide refi retention opportunities for mortgage servicers short-term.
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