Issue 127 - Hello and Happy Tuesday.

The Fed’s nightmare continues: inflation won’t quit, and Americans keep swiping their credit cards like nothing’s wrong. Tariffs are starting to bite at the wholesale level, but consumers are shrugging it off.

The big takeaway? Mortgage rates stay stuck until shelter inflation cools.

Personal Note:

School is BACK. Gray and JJ headed back to school last Wednesday, and I think that it is comical that by tomorrow, we will have had 8 days of school, and only ONE (today) will have been a full scheduled day until 3 pm.

JJ celebrated his 8th birthday on Friday, the 15th. Had an after-school slip and slide party. It was great, really warm weather and good friends having a blast together.

He was given some really excellent gifts, including a manual can crusher for his recycling business and a NEW BIKE that he has been out on at least 5-6 times a day, haha.

TLDR (Too Long Didn’t Read) Summary

• ⬇️ RATES - Keeping the trend going!

• 📊 TECHNICALS - Inflation up, consumers still spending.

INTEREST RATES
Rates 📢 August 19th, 2025

Rate data as of morning of publication. Unless noted otherwise, all scenarios are assuming 30 Year-Fixed mortgage, Purchase or R/T Refinance. No origination points charged, 780 FICO score, and 20% down payment. Provided for consumer education only and does not serve as a binding offer to extend lending. Payment period, interest rate, APR, and other terms subject to income, asset, and credit profile qualification. Provided courtesy of GTG Financial, Inc. NMLS 1595076. Equal housing opportunity. www.nmlsconsumeraccess.org

💡 Why This Matters

📉 Rates Improve as Bonds Find Support
Mortgage rates ticked lower across all products this week, with FHA leading the way at a 0.250% drop and Conventional, VA, and Jumbo all improving by about 0.125%. This marks a welcome shift after weeks of sideways trading, giving buyers a bit more affordability heading into late summer.

🎤 All Eyes on Powell at Jackson Hole
The Fed’s Jackson Hole Symposium begins midweek, with Chair Powell speaking Friday. Markets widely expect a 25bp rate cut in September, but Powell is unlikely to overcommit. Instead, his tone will set the stage: a cautious “wait and see” message could keep rates steady, while a firmer signal toward cuts could drive further improvement.

📊 Fed Officials Stress ‘Move and Wait’
Atlanta Fed President Raphael Bostic echoed the “move and wait” stance, suggesting the Fed will likely cut in September, then pause to assess the data. This strategy could support mortgage bonds if economic numbers soften, but any strong growth or inflation readings would stall progress.

🔑 Realtor Insight
Rates are improving now, but this week’s Fed commentary could shift momentum quickly. Advise pre-approved clients not to wait too long—today’s dip in rates may not last if Powell strikes a more cautious tone.

TECHNICALS

Inflation Rises, Consumers Still Spending

📈 Consumer Inflation – Stable but Sticky

• Prices rose 0.2% in July, bringing annual inflation to 2.7% (same as June).

  

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• Core inflation (excludes food & energy) ticked up to 3.1%, slightly hotter than expected.

• Biggest culprits? 🏠 Shelter, ✈️ airline fares, 🚙 used cars, and medical services.

• Tariffs didn’t cause a major spike—yet.

Realtor Insight: Rising shelter costs are still the driver of inflation, which keeps the Fed cautious. Translation: mortgage rates won’t ease dramatically until shelter inflation cools.

🏭 Wholesale Inflation (PPI) – Tariffs Showing Up

• Prices producers pay jumped 0.9% in July (well above expectations).

• Annual PPI surged to 3.3% from 2.4%.

• Tariffs appear to be flowing into supply chains, though consumer prices haven’t fully absorbed them.

Realtor Insight: If higher producer costs filter down to consumers, it could slow spending—and eventually cool housing demand. But for now, the housing market is still digesting shelter inflation.

🛍️ Retail Sales – Consumers Keep Swiping

• Retail sales rose 0.5% in July (slightly below estimates, but June was revised higher).

• The “control group” (feeds into GDP) rose 0.5%, stronger than expected.

• Bottom line: Americans are still spending, tariffs or not.

Realtor Insight: Strong spending = steady economic growth, which keeps pressure on rates. Until consumer behavior cracks, the Fed won’t be in a rush to cut.

👷 Jobless Claims – No Big Changes

• Initial claims dipped to 224,000, while continuing claims eased to 1.95M.

• This marks 12 straight weeks above 1.9M, showing once you’re out of work, finding a new job is harder.

Realtor Insight: Employers holding onto workers is good for housing stability—people with steady income = potential homebuyers. But slower hiring could mean fewer buyers later in the year.

🔮 What’s Ahead This Week

• 🏠 Builder Confidence (Mon)

• 🏗️ Housing Starts & Permits (Tue)

• 📑 Fed Meeting Minutes (Wed)

• 🏡 Existing Home Sales + Jobless Claims (Thu)