07/17/2024
✂️ Inflation Drops Again in June, Clearing the Path to a Fed Rate Cut This Fall—and Relief for Homebuyers ✂️
Annual inflation in the U.S. dropped to its lowest level in more than three years last month, increasing the odds of a September interest rate cut that would bring relief to mortgage markets.
In the 12 months through June, the consumer price index rose 3%, according to data released by the Department of Labor on Thursday. It was the lowest annual increase in prices since March 2021.
On a monthly basis, overall prices dropped 0.1% in June from May, the first monthly decline since the onset of the COVID-19 pandemic in spring 2020. Costs for energy and vehicles dropped on both a monthly and annual basis, offsetting rising housing prices.
Prices for shelter, which make up more than a third of the index, continued to rise last month under the Labor Department’s method of calculating housing costs. Rent rose 5.2% from a year ago, while owner’s equivalent rent, a measure of what homeowners would pay to rent their own residence, was up 5.4%.
For potential homebuyers, the overall cooling of inflation toward the Federal Reserve’s 2% target could mean incoming relief from higher mortgage rates. The central bank is now viewed as extremely likely to slash a quarter point from its current benchmark rate of 5.3% when policymakers meet in September.
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Annual inflation in the U.S. dropped to its lowest level in more than three years last month, increasing the odds of a September interest rate cut that would bring relief to mortgage markets. In the 12 months through June, the consumer price index rose 3%, according to data released by the Departm
