Existing Home Sales Drop 1.7% Amid Persistent High Rates

The Bureau of Labor Statistics releases its July consumer price index figures this morning, with forecasts pointing to a slight easing in the annual inflation rate to 3.4 percent. That would mark the second straight month of moderation after June came in at 3.5 percent. Yet behind the decimal points sit the same stubborn realities that have squeezed paychecks for years: energy costs, housing expenses, and wage growth that continues to trail price increases for many households.

Analysts at J.P. Morgan Asset Management noted that rising rental vacancies and slower wage gains are helping to ease some pressures, but they flagged the Strait of Hormuz as a wildcard that could reverse any gains if traffic remains disrupted. For ordinary workers, those abstract factors translate directly into higher costs at the pump and on the grocery shelf. Wage growth registered just 3.2 percent over the past year, the slowest pace since 2021, leaving middle- and lower-income families with less real purchasing power even when nominal paychecks look bigger.

The housing market tells a parallel story of stalled progress. Mortgage rates, after climbing for five straight weeks, edged down only fractionally last week to an average of 6.77 percent for a 30-year fixed loan. That tiny retreat sparked a modest 3.6 percent increase in total mortgage applications, according to the Mortgage Bankers Association. Purchase applications rose 3 percent while refinance volume climbed 5 percent. Still, both categories remain well below levels from a year earlier, and August is shaping up as another sluggish sales period.

Lenders tracking daily movements reported fixed rates actually moving higher again on Wednesday, with the 30-year average reaching 6.65 percent. Refinance rates sat at 6.73 percent. These levels continue to price out many first-time buyers and young families who watched home prices remain elevated even as borrowing costs refuse to return to pre-pandemic norms. The average refinance loan size has shrunk to its lowest point since last July, reflecting how few homeowners see enough incentive to move.

The combination leaves working households in a bind. Official data may signal cooling inflation, yet the cumulative price level stays far above where it stood a few years ago. Energy remains a category to watch closely in the new CPI release, as any uptick there would quickly feed into broader costs. At the same time, the housing sector shows little relief for those trying to build equity or escape rising rents. Demand has trickled back only at the margins, and analysts expect sales to stay weak through the rest of the summer.

For millions of Americans outside elite financial circles, these trends reinforce a familiar pattern: measured improvements on paper that fail to restore the purchasing power or stability families once took for granted. The next set of government numbers will clarify whether the recent dip in inflation holds, but the mortgage data already shows how elevated borrowing costs keep the market frozen for the very households that need relief most.