Weekly Economic Recap: 7.27 - 8.2.26

Housing & Mortgage Finance

Home price growth continued to run hot on a nominal basis but stayed underwater in real terms. The S&P/Case-Shiller Home Price Index rose 1.6% YOY in May, up from 1.2% in April and above the 1.3% consensus estimate — Chicago posted the strongest YOY appreciation among the 20-city composite for the third straight month. MOM growth came in at 0.9%, easing slightly from April's 1.0% but still within the range of typical spring seasonal strength. The real story remains the inflation-adjusted picture: with May's CPI running at 4.2%, real (inflation-adjusted) home prices were negative for the 12th consecutive month, a 2.6-point gap between nominal appreciation and inflation.

The Fannie Mae/Freddie Mac Home Price Index told a similar story, up 2.2% YOY in May versus 2.0% in April.

Mortgage rates moved the wrong direction for buyers. The MBA 30-yr Mortgage Rate climbed 7 bps to 6.76% in the week ending July 24 — its highest level since August 2025, and now 70 bps higher than pre-Iran-strike levels. Energy costs eased somewhat in June, but renewed regional hostilities have revived expectations that the Fed holds rates higher for longer, and mortgage pricing continues to track Treasury yields on that inflation-persistence narrative. Mortgage applications fell 6.4% WOW as of July 24 — the sharpest weekly decline in two months.

One bright spot buried in the GDP release below: residential fixed investment posted its first increase in six quarters, a potential early signal that the housing drag on GDP may be easing.

Labor Market

Labor market data continued to send mixed signals depending on the series. ADP Employment Change decelerated to 15k for the week of July 11, down from 16.5k the prior week — consistent with the low-hire, low-fire dynamic that's defined 2026 hiring.

Jobless claims told a more constructive story. The 4-week moving average fell to 202.75k (week ending July 25) from 207.75k — the fifth straight weekly decline and tying the year's low. Initial claims came in at 197k, up from the prior week's 188k (a 57-year low) but still beneath the 200k consensus. Continuing claims fell 7k to 1.782M, below the 1.8M estimate and the lowest reading in over a month. Taken together, these readings point to a labor market still operating near full employment on the layoff side, even as headline hiring activity stays subdued.

Inflation

PCE rose 3.7% YOY in June, decelerating from 4.1% in May and landing in line with expectations. Core PCE — the Fed's preferred underlying inflation gauge — increased 3.3% YOY, still well above the 2% target, though the MOM print came in soft at just 0.1%, below the 0.2% expected. The deceleration in the monthly core reading is a modest disinflationary data point even as the YOY trend remains elevated.

GDP & Consumer Spending

The advance estimate for Q2 GDP showed the economy expanding at a 1.5% annualized rate, decelerating from 2.1% in Q1 and missing the 2.1% consensus forecast. The largest contributor to the slowdown was net trade — exports dropped sharply while import growth stayed strong, widening the trade drag on the headline number. Partially offsetting this: consumer spending, private business investment, and exports all showed continued strength on an absolute basis, and — as noted above — residential investment turned positive for the first time in six quarters.

Real Consumer Spending grew at a 3.2% annualized rate in Q2, the strongest pace in three quarters, up sharply from just 0.5% in Q1. The acceleration was supported by larger-than-usual tax refunds and a consumption boost tied to the FIFA World Cup.