Data Analysis

The Bureau of Economic Analysis reported the PCE price index rose 3.7 percent over the year in July 2026, with the core index up 3.3 percent, both above the Federal Reserve's 2 percent target.

Personal income rose 0.4 percent in July while inflation-adjusted spending was close to flat. The reading is the clearest available explanation for why mortgage rates have not moved lower.

The Bureau of Economic Analysis reported on August 26, 2026 that the personal consumption expenditures price index rose 3.7 percent in July 2026 from a year earlier, and 0.2 percent from June. The core index, which excludes food and energy, rose 3.3 percent over the year and 0.2 percent over the month. Personal income increased $115.1 billion, or 0.4 percent. Spending increased $36.3 billion, or 0.2 percent, but after adjusting for prices it rose less than 0.1 percent. The personal saving rate was 3.0 percent.

That is the whole picture in one paragraph, and every part of it points the same direction for anyone waiting on cheaper financing.

What did the July PCE report actually show?

The PCE price index is the inflation measure the Federal Reserve names in its own policy framework. The Bureau of Economic Analysis publishes it each month inside the Personal Income and Outlays report, and the July 2026 edition was released at 8:30 a.m. ET on Wednesday, August 26, 2026.

Headline inflation came in at 3.7 percent for the twelve months through July 2026. That matched June. The Bureau of Economic Analysis reported 4.1 percent for May 2026 and 3.8 percent for April 2026, so the last four readings have moved in a narrow band between 3.7 and 4.1 percent with no clear downward trend inside it.

Core inflation, the measure economists watch because food and energy prices swing for reasons that have little to do with underlying demand, rose 3.3 percent over the year through July 2026. On a monthly basis the core index rose 0.2 percent in July after rising 0.1 percent in June. The headline index actually fell 0.1 percent in June before rising 0.2 percent in July.

The Federal Reserve's stated target is 2 percent PCE inflation. July 2026 came in 1.7 percentage points above that on the headline measure and 1.3 points above it on core.

Why does PCE inflation matter more than CPI for mortgage rates?

Mortgage rates are not set by the Federal Reserve. They track the 10-year Treasury yield, and that yield reflects what bond investors expect inflation and short-term interest rates to do over the coming decade. When an inflation reading comes in above target and shows no momentum toward target, the case for lower yields weakens, and mortgage rates hold where they are.

That is close to what the mortgage market has done all summer. Freddie Mac's Primary Mortgage Market Survey put the 30-year fixed rate at 6.66 percent for the week ending August 27, 2026, one basis point above the prior week's 6.65 percent. The 15-year fixed averaged 5.98 percent. Our coverage of this week's mortgage rate reading laid out the arithmetic: rates are up about 0.68 percentage points from the February 26, 2026 low of 5.98 percent on the 30-year, which works out to roughly $142 a month on a $320,000 loan.

The July PCE report is the reason that gap has not closed. A 3.3 percent core reading gives the bond market very little reason to price in aggressive rate cuts.

Are Americans still spending?

Yes, though the composition has shifted in a way worth watching.

Spending on services rose $86.2 billion in July 2026. Spending on goods fell $49.9 billion. Households are still paying for rent, insurance, travel, healthcare and the rest of the services basket, and they are buying fewer physical items.

The real-terms number is the one that matters. Inflation-adjusted personal consumption expenditures rose $1.3 billion in July 2026, which the Bureau of Economic Analysis reported as less than 0.1 percent. Households spent more dollars and got almost nothing extra for them.

Income held up better. Disposable personal income rose $125.9 billion, or 0.5 percent, and after adjusting for prices it rose 0.4 percent. Personal saving totaled $712.0 billion in July 2026, a saving rate of 3.0 percent of disposable income. A 3.0 percent saving rate is thin by historical standards, which limits how much of a cushion the average household has if income growth slows.

What does 3.7 percent inflation mean for Florida buyers?

It means the affordability math that has governed the Florida market since 2024 is unlikely to change in the next few months on the financing side.

Florida home prices are already close to flat. The Federal Housing Finance Agency reported Florida house prices up 0.96 percent over the year in the second quarter of 2026, against 2.1 percent nationally, which ranked the state 41st of 51. Our analysis of the Q2 house price index broke that down by metro, with West Palm Beach up 3.20 percent at the top of the state and Miami down 0.27 percent and Jacksonville down 0.37 percent at the bottom.

Put the two together. Prices in most of Florida are roughly where they were a year ago. Financing costs are roughly where they were a year ago, with the 30-year fixed at 6.66 percent against 6.56 percent a year earlier. Buyers who have been waiting for one of those two numbers to break in their favor have now waited through a full year in which neither did.

Sellers face the mirror image. Inventory that has been sitting is not going to be rescued by a sudden drop in rates, because the inflation data does not support one. Local conditions vary widely across the state, and the county-level and metro-level detail on our Florida market hubs shows how differently Tampa, Orlando, Miami and Jacksonville are behaving inside the same statewide average.

What comes next on the calendar?

The Bureau of Economic Analysis is scheduled to publish U.S. International Trade in Goods and Services for July 2026 on September 3, 2026. Personal Income and Outlays for August 2026 is scheduled for September 30, 2026, which will be the next PCE reading.

Between now and then, the weekly Freddie Mac survey each Thursday is the running indicator of whether the bond market's read on inflation is loosening. Two or three consecutive readings below 3.5 percent on core PCE would change the conversation. One month at 3.3 percent does not.

Limitations

These figures are monthly estimates and the Bureau of Economic Analysis revises them. The July 2026 release states that estimates were updated for April through June 2026, so the June and May figures cited here may differ from what was originally published for those months. Month-over-month changes at 0.1 and 0.2 percent are small relative to the revision history of this series and should not be read as a trend on their own.

The PCE price index is a national measure. It is not a Florida measure and not a housing-cost measure, though shelter costs are one input to it. Nothing in this report describes Florida home prices, Florida rents or any local market condition directly.

The relationship between inflation readings and mortgage rates is real but indirect. Mortgage rates respond to many things at once, including Treasury supply, mortgage-backed securities demand and lender margins. This report explains part of why rates have held near 6.66 percent, not all of it.

Sources

• U.S. Bureau of Economic Analysis, "Personal Income and Outlays, July 2026," released August 26, 2026, https://www.bea.gov/news/2026/personal-income-and-outlays-july-2026 and the release document at https://www.bea.gov/sites/default/files/2026-08/pi0726.pdf
• U.S. Bureau of Economic Analysis, Personal Consumption Expenditures Price Index data page, monthly year-over-year values for April through July 2026, https://www.bea.gov/data/personal-consumption-expenditures-price-index
• U.S. Bureau of Economic Analysis release schedule, https://www.bea.gov/news/schedule
• Freddie Mac Primary Mortgage Market Survey, week ending August 27, 2026
• Federal Housing Finance Agency House Price Index, second quarter 2026, released August 25, 2026

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.