U.S. inflation rose less than anticipated in May, according to the Bureau of Labor Statistics This Week in Real Estate. The Consumer Price Index (CPI) increased by 0.1% for the month, bringing the annual inflation rate to 2.4%. While this marks a significant improvement from the post-pandemic peak of 9.1% in June 2022, inflation remains above the Federal Reserve’s long-term target of 2%. As a result, financial markets widely anticipate that the Federal Reserve will maintain its current interest rate policy at the upcoming June 18 meeting. Economists surveyed by FactSet assign a 100% probability that the central bank will hold rates steady, delaying any potential rate cuts until later in the year. Mortgage activity showed signs of renewed momentum. “Coming out of the Memorial Day holiday, mortgage applications increased to the highest level in over a month,” noted Joel Kan, Vice President and Deputy Chief Economist at the Mortgage Bankers Association (MBA). “Treasury yields experienced some movement during the week, creating additional opportunities for borrowers.” Mortgage applications for home purchases rose 10% week-over-week and were up 20% compared to the same period last year. This uptick is likely supported by a notable increase in housing inventory, with Realtor.com reporting that active listings are approximately 31% higher than they were a year ago. Below are key events from the second week of June impacting our business:
INFLATION UP SLIGHTLY IN MAY. Despite inflationary pressure from tariffs, inflation in May rose slightly but came in softer than expected. The Consumer Price Index increased from 2.3% in April to 2.4% in May year-over-year, according to the Bureau of Labor Statistics’ report. During the past twelve months, on a non-seasonally adjusted basis, the Consumer Price Index rose by 2.4% in May. Excluding the volatile food and energy components, the “core” CPI increased by 2.8% over the past twelve months. A large portion of the “core” CPI is the housing shelter index, which increased 3.9% over the year, the lowest reading since November 2021. On a monthly basis, the CPI rose by 0.1% in May (seasonally adjusted), after a 0.2% increase in April. The “core” CPI increased by 0.1% in May. The index for shelter makes up more than 40% of the “core” CPI, rising by 0.3% in May, following an increase of 0.3% in April. Read the full story here.
PURCHASE DEMAND NEAR 2 YEAR HIGHS; REFIS BOUNCE BACK. After a Memorial Day-induced lull, mortgage application activity rebounded sharply last week, according to the Mortgage Bankers Association’s (MBA) latest survey. Both purchase and refinance demand climbed to their highest levels in over a month, with the composite index rising 12.5% on a seasonally adjusted basis. “Despite ongoing uncertainty surrounding the economy, homebuyers seem to be taking advantage of loosening housing inventory in certain markets,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. Refinance applications jumped 16% on the week and are now 28% higher than the same week last year. Purchase apps rose 10% week-over-week and are now running 20% above 2024 levels, marking a continuation of the strong year-over-year gains seen in recent reports. There are only 2 other weeks with higher purchase index readings going back to May 2023, and they were only barely higher. Read the full story here.
ELEVATED MORTGAGE RATES AREN’T DISCOURAGING HOMEBUYERS. In a total shocker for 2025 – which is receiving no airtime whatsoever – purchase application data from last week showed 20% year-over-year growth and 10% week-to-week growth. People have no idea what to make of this data line in 2025, so most tend to ignore talking about it. The latest weekly data on total pending sales from Altos offers valuable insights into current trends in housing demand. Typically, mortgage rates around 6% are necessary for significant growth in the housing market. Although total pending home sales are slightly higher than last year, it’s surprising to see this data remain steady despite elevated rates in 2025. All in all, the housing market is not only experiencing a healthier inventory year, but demand is holding up even with elevated mortgage rates, crazy headlines and one bear market print in stocks. The most significant development in the housing market for me has been the growth of inventory in 2024 and 2025. As someone who described the housing market as unhealthy in late 2020 and savagely unhealthy in early 2022, the inventory growth we’ve experienced over the past two years has been a blessing. Two weeks ago, the increase in inventory was a bit slow, but we had a good pick-up up this week, as the housing market is heading back to normal inventory levels, which will lay the foundation for many years to come. Read the full story here.
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