Existing Home Sales Drop 1.7% Amid Persistent High Rates

The Bureau of Labor Statistics is set to release its July consumer price index figures at 8:30 a.m. ET, with forecasts pointing to a modest decline in the annual inflation rate to 3.4 percent from 3.5 percent in June. That would mark the lowest reading since March and come in below earlier expectations. Analysts attribute the cooling trend to rising rental vacancies that have curbed rent increases, a lighter tariff burden than in prior periods, and slower wage gains that have eased cost pressures in some sectors.

Energy prices remain a focal point in the upcoming report, as fluctuations there can quickly influence broader measures. David Kelly of J.P. Morgan Asset Management noted that the pace of further declines hinges partly on traffic volumes through the Strait of Hormuz, underscoring how external supply factors continue to shape domestic price outcomes. Wage growth, meanwhile, slowed to 3.2 percent over the year ending in July, the weakest advance since 2021. This gap between price increases and pay raises has now persisted for several months, leaving middle- and lower-income households with reduced purchasing power even when nominal earnings rise.

ZipRecruiter economist Nicole Bachaud observed that many workers find their take-home resources stretched despite higher dollar figures on paychecks. Such patterns illustrate how sustained inflation, even at moderating rates, disproportionately affects those reliant on steady wage growth rather than asset appreciation or investment income.

Separate data from the mortgage market show a modest response to recent rate movements. After five consecutive weeks of increases, average 30-year fixed mortgage rates dipped slightly last week to 6.77 percent from 6.81 percent, according to the Mortgage Bankers Association. The change coincided with a 3.6 percent rise in total mortgage applications compared with the prior week. Purchase applications increased 3 percent, while refinance requests climbed 5 percent, though both categories remain below year-ago levels.

Current national averages reported by Zillow place the 30-year fixed rate at 6.65 percent as of Wednesday, with the 15-year fixed at 6.00 percent and the 5/1 adjustable-rate mortgage at 6.51 percent. Refinance rates sit marginally higher across most categories. Joel Kan of the Mortgage Bankers Association linked the small rate decline to a brief dip in oil prices tied to hopes for reduced tensions in the Middle East. Even so, August typically sees subdued home sales activity, and this year’s market faces additional headwinds from elevated home prices that limit affordability.

These indicators together reflect an economy adjusting through supply and demand channels rather than abrupt policy shifts. Rising vacancies in rentals and moderating wage pressures suggest market participants are responding to price signals, while the housing sector shows incremental sensitivity to borrowing costs. Persistent gaps between inflation and wage growth continue to highlight the real constraints facing households dependent on earned income.