Mortgage rates increased three basis points last week according to the Freddie Mac Primary Mortgage Market Survey as of July 23rd. This puts the 30-year fixed rate at an 11-month high. Rates have been pushed higher by inflation and unrest in the Middle East. While inflation slowed to an annual pace of 3.5% in June, it’s still well above the Federal Reserve’s 2% target. Inflation has been driven up largely by oil prices, which topped $100 a barrel this week amid renewed tensions in the Middle East.
Mortgage applications increased 1.9 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending July 17th. “Mortgage rates reached another high point last week, with the 30-year conforming rate now at its highest level since August 2025,” said Mike Fratantoni, MBA’s SVP and Chief Economist. “However, purchase volume increased modestly for the week. Growing home inventory in many markets is supporting more purchase activity. Incoming data showed that inflation dropped in June, but with oil prices spiking again, that improvement seems unlikely to continue in July data, and mortgage rates are likely to remain higher as a result.”
Residential construction rebounded in June as housing starts and completions recovered from May’s unusually weak levels, though building permits continued to trend lower. The latest Census Bureau data suggests that while builders remain cautious about future projects, construction activity itself regained momentum after last month’s sharp pullback. Privately owned housing starts jumped 19.0% to a seasonally adjusted annual rate of 1.427 million, reversing much of May’s decline and coming in 3.5% above the June 2025 pace. The headline increase was driven almost entirely by multifamily construction, The sharp rebound in total housing starts also reinforces the notion that May’s exceptionally weak reading was largely the result of unusually volatile multifamily data rather than a broad deterioration in residential construction.
The number of Americans seeking unemployment benefits for the first time unexpectedly fell last week to the lowest since the 1960s, indicating the U.S. job market continues on an even keel. Initial claims for state jobless benefits dropped by 22,000, the largest decline in three months, to a seasonally adjusted 187,000 for the week ended July 18, the Labor Department said on Thursday. That was the lowest level of new applications since September 1969. Economists noted the drop was partly due to seasonal quirks associated with the annual summertime temporary shutdowns of auto plants to retool for production of next year’s models. “There may be some seasonal noise in the data, but the extremely low level of claims is hard to ignore and the trend in continued claims remains encouraging,” Matthew Martin, senior U.S. economist at Oxford Economics, said.
