Weekly Economic Recap from 5.25 - 6.1.26

The housing market is showing clear signs of cooling, though demand hasn't evaporated — it's just stalling. Five consecutive weeks of rising mortgage rates (now at 6.65% per the MBA) are doing the work the Fed hoped for, slowing what had been a prolonged seller's market. Mortgage applications fell 8.5% in the latest week, following a 2.3% drop the week before — not surprising given the rate environment.

Home price appreciation is also decelerating. The S&P Case-Shiller 20-City Index rose just 0.8% year-over-year in March, the 10th straight month that inflation has outpaced home price gains — quietly eroding homeowner equity. Building permits did bounce back in April (+4.4%), a modest bright spot.

On the inflation front, Core PCE ticked up to 3.3% year-over-year in April, and traditional PCE hit 3.8% — the highest since May 2023. The month-over-month pace is slowing, but the annual trend is moving in the wrong direction, and bond markets are now pricing in a rate hike before year-end rather than cuts.

GDP growth came in at 1.6% for Q1 — better than Q4 2025's 0.5%, but below expectations. Consumer spending and investment both underperformed estimates, and a 21.1% surge in imports weighed on net trade.

The labor market remains resilient but bears watching. The 4-week jobless claims average rose to 209,000 — its highest in over a month — with both initial and continuing claims ticking up. Still well below year-ago levels, but the trend is worth monitoring.

Follow next week for JOLT Job Openings, Unemployment, and Hourly Wage Growth.