Market Brief

The Fed's preferred inflation gauge is running at 3.7%, and Americans stopped spending in real terms. Both facts point the same way for mortgage rates.

Prices rose 3.7% in the year to July on the Fed's preferred gauge while real consumer spending was flat. Mortgage rates near 6.66% follow from that.

The daily read on the numbers that set Florida housing costs: tax policy, insurance, mortgage rates and construction, and what they mean for a buyer or seller in Northeast Florida this week.

Income went up. Real spending did not move at all.

The Bureau of Economic Analysis released Personal Income and Outlays for July on Wednesday, August 26. The top line looks like a healthy month. Personal income rose $115.1 billion, or 0.4% at a monthly rate, double June's 0.2%. Disposable personal income rose $125.9 billion, or 0.5%, against 0.2% in June. Adjusted for inflation, disposable income still rose 0.4%.

Then the spending line. Personal consumption expenditures rose $36.3 billion, 0.2% in current dollars, down from 0.3% in June.

Adjusted for inflation, real PCE rose $1.3 billion, which the BEA reports as less than 0.1%. In June it was 0.4%.

So households took home meaningfully more money in July and bought essentially the same quantity of goods and services they bought in June. Real income up 0.4%, real consumption up 0.0%. That gap is the whole story of the release.

Where the spending went, and where it left

The composition is sharper than the total. Inside that $36.3 billion increase in current-dollar spending:

• Services spending rose $86.2 billion.
• Goods spending fell $49.9 billion.

Roughly $50 billion came out of goods in a single month and more than that went into services. For anyone selling houses this matters more than it looks. Furniture, appliances, building materials and vehicles are goods. A household that is pulling back on goods while its income rises is a household that is postponing the purchases that cluster around a move.

The number the Fed is looking at

The same release carries the PCE price index, which is the inflation measure the Federal Reserve targets, not the more widely quoted consumer price index.

• PCE price index, July over June: up 0.2%. June had been down 0.1%.
• PCE price index, July over July a year ago: up 3.7%.
• Excluding food and energy, the core index: up 0.2% on the month and up 3.3% on the year.

A core rate of 3.3% is not near the Fed's 2% target. That is the single most important fact in this release for a Florida buyer, and it is worth being precise about why: the Fed has said repeatedly it sets policy against this gauge, so a 3.3% core reading is an argument against rapid rate cuts regardless of what the labour market does.

Which is exactly what mortgage rates did

Freddie Mac's Primary Mortgage Market Survey for the week ending August 27 put the 30-year fixed at 6.66%, against 6.65% the week before and 6.56% a year ago. The 15-year fixed was 5.98%, from 5.95%. Chief economist Sam Khater described rates as having "changed little this week averaging 6.66%."

Three consecutive weeks inside a tenth of a point. We wrote about where mortgage rates stand this week separately; this release is the reason they are sitting still. A resilient consumer and a core inflation rate above 3% do not produce falling long rates.

What we are not saying

Two honest limits.

The saving rate does not obviously fit. Personal saving was $712.0 billion in July and the saving rate was 3.0% of disposable income. If income rose 0.5% and spending rose 0.2%, saving should have risen, and a 3.0% rate is low by the standards of most of the last decade. We are reporting the figure as published and are not going to construct a story about household balance sheets from one month of it.

This is national data, and Florida is not the nation. Nothing in this release is measured at the state level. It sets the cost of money, which reaches every Florida buyer through the mortgage rate, but it says nothing directly about Jacksonville inventory or prices. For that, see our own Jacksonville housing market data.

One scheduling note that will matter next month: BEA is combining its annual update with the next monthly release, so there is no August personal income report until September 30, when August and the revised monthly series arrive together. Anyone watching this series should expect a five-week gap rather than a missing month.

What it means in Northeast Florida

A 30-year fixed near 6.66% has now been the working assumption for most of the summer. Sellers pricing against a memory of 6% are pricing against a rate that has not appeared in this market this year, and buyers waiting for a cut are waiting on a core inflation rate that has not yet given the Fed a reason to deliver one.

The goods-versus-services split is the part worth carrying into a listing conversation. Buyers are still spending, but they are spending on services, and pulling back on exactly the durable categories a home purchase drags along with it. That is consistent with what the local data has been showing on concessions and price cuts, and it is an argument for pricing a home to sell rather than to test.

People also ask

What is the PCE inflation rate right now?

The PCE price index rose 3.7% in the twelve months through July 2026, and 0.2% from June to July, according to the Bureau of Economic Analysis release of August 26, 2026. Excluding food and energy, the core PCE price index rose 3.3% over the year and 0.2% on the month. PCE is the gauge the Federal Reserve targets, which is why it carries more weight for mortgage rates than the more widely quoted consumer price index.

Did consumer spending go up in July 2026?

In current dollars, yes, by $36.3 billion or 0.2%. Adjusted for inflation it effectively did not: real personal consumption expenditures rose $1.3 billion, which the BEA reports as less than 0.1%, against 0.4% in June. The composition moved more than the total, with services spending up $86.2 billion and goods spending down $49.9 billion in the same month.

Will mortgage rates fall in 2026?

Nobody can answer that, and anyone quoting you a figure is guessing. What can be said is what the current data supports. Freddie Mac put the 30-year fixed at 6.66% for the week ending August 27, 2026, barely changed across three weeks, and core PCE inflation is running at 3.3% against a Federal Reserve target of 2%. Long rates are unlikely to fall materially while the Fed's preferred inflation gauge sits a full point above target and consumer income keeps rising.

Sources

• U.S. Bureau of Economic Analysis, Personal Income and Outlays, July 2026, release BEA 26-39, issued August 26, 2026. https://www.bea.gov/news/2026/personal-income-and-outlays-july-2026
• Freddie Mac Primary Mortgage Market Survey, week ending August 27, 2026. https://www.freddiemac.com/pmms

Disclosure: Jon Brooks is a co-founder of Momentum Realty, a Florida real estate brokerage that owns and funds Florida Housing Intelligence. Momentum has a financial interest in Florida real estate transactions, including in markets named here. See our editorial standards.