What’s the expectation for today’s CPI data?

What’s the current prediction for CPI data?

Consumer Price Index data for July 2024 will get released today, and the latest forecasts have CPI rising 0.2% month-over-month after falling 0.1% in June 2024. This would keep the annual inflation rate at a 3%.

Core inflation, excluding food and energy costs, is expected to rise 0.2% month over month, and the annual rate is expected to dip to 3.2%.

Lydia Boussour, a senior economist at EY-Parthenon, said the July inflation report is “going to be bringing more evidence that the disinflation process continues and remains on track.” She also said that this kind of outcome will “reinforce the case for a fed rate cut at the September meeting.”

How did mortgage rates react to the first round of data?

The Producer Price Index for July 2024 was released today. This report shows the average change in prices that domestic producers receive for goods and services. The month-over-month PPI showed a bit of cooling in terms of prices for producers.

Markets reacted positively to the data, the bond market rallied, and the national average rate for a 30-year, fixed-rate mortgage ended yesterday’s session 0.03% lower to 6.52%*.

Today’s Consumer Price Index data is often more impactful, and produces a more meaningful result. We’ll see if a cool PPI means we’re getting a cooler CPI.

What are experts predicting for when rates drop?

The current sentiment among mortgage market watchers is that it’s a matter of ‘when’ mortgage rates cool off, not ‘if’. A recent article from Realtor.com surveyed several experts to get their take on what could occur when rates drop even lower than they currently are.

Tan Tunador, vice president and senior loan officer with Atlantic Coast Mortgage, emphasized how the ‘lock-in effect’ will ease. Tunador stated, “Home sellers have been sitting on the sidelines, not wanting to give up their COVID-era interest rates.”

Mason Whitehead, a Dallas-based branch manager for Churchill Mortgage, believes that more homebuyers will start to enter the market when rates drop. Whitehead said, “When rates drop, I think you will see pent-up demand hit the market again. For some that didn’t qualify at 7.5%, they will qualify at 6%, so you have more people able to buy as well.”

Charlie Dougherty, director and senior economist at Wells Fargo, expects sales to pick up. Dougherty stated, “Mortgage applications have perked up, and refinancing activity also looks to be picking up as rates go lower and owners carrying elevated mortgage rates seek to reduce their monthly payments. All told, mortgage applications remain low, but the recent upturn is a promising sign that buying activity is starting to heat up and defrost a housing market frozen by higher interest rates.”