# US inflation eases to 3.7% in June, mortgage rates linger near 6.8%

**Published:** 2026-07-31T09:19:44.982Z  
**Topic:** Inflation  
**Sentiment:** neutral  
**Publisher:** TrendWatcher — https://www.trendwatcher.in/article/6b9d5ce5-75da-4b82-8579-65f929a4c7b8

June PCE inflation fell to 3.7% (two‑month low) and 0.1% m/m, but oil‑driven price pressure keeps 30‑yr mortgage rates near 6.75%, shaping housing market

The Personal Consumption Expenditures (PCE) price index slipped 0.1% month‑over‑month in June, delivering an annual inflation rate of 3.7% – the lowest level in two months and exactly on economists’ forecasts [2]. The modest decline comes as oil‑related price pressures ease, yet mortgage rates remain anchored in the mid‑6% range, keeping housing affordability under pressure.

| At a glance | |
|---|---|
| PCE inflation (annual) | 3.7% (vs. 4.1% in May, on target) |
| PCE month‑over‑month change | –0.1% (vs. +0.7% in May) |
| Core PCE (annual) | 3.3% (down from 3.4% in May) |
| 30‑yr mortgage rate | 6.75% (≈ +1.0% vs. March) |

## Inflation dip and its drivers  
June’s 0.1% month‑over‑month drop in the PCE index reversed a six‑year streak of rising prices, marking the first decline since 2020 [2]. The slowdown was led by a 9.2% fall in gasoline and energy inflation, which had surged to 20.9% in March after the Iran conflict began. Although a tentative cease‑fire was discussed in June, the conflict resumed, leaving future energy price trends uncertain. Core inflation, which strips out food and energy, also eased to a 0.1% monthly gain, down from 0.3% in May, indicating broader price moderation beyond volatile energy components.

## Mortgage rates stay high despite cooling inflation  
Even as inflation cooled, mortgage rates have hovered near 6.75% on 30‑year conventional loans, a full percentage point above the March level [1]. Experts attribute the persistence of high rates to lingering inflation concerns and the ongoing Iran war, which could push oil prices higher and force the Federal Reserve to maintain a tighter policy stance. The CME Group’s FedWatch tool shows a roughly 75% probability of a rate hike at the September Fed meeting, reinforcing expectations that mortgage rates will likely remain in the mid‑to‑high‑6% band for the remainder of 2026 [1].

## What to watch  
- **June core PCE release** – a further decline could ease pressure on 10‑year Treasury yields and open room for mortgage‑rate cuts.  
- **Federal Reserve September meeting** – any decision to raise rates would likely keep mortgage rates elevated.  
- **Oil price movements** – a sustained rise above current levels could reignite inflation and push rates higher.

The June inflation dip offers a brief reprieve, but the unresolved Iran conflict and entrenched price pressures mean that both inflation and mortgage rates could swing sharply in the coming months, leaving the housing market and broader economy in a state of heightened uncertainty.

## Sources
1. CBS News — [What is the mortgage rate forecast for fall 2026? Here's what experts expect.](https://www.cbsnews.com/news/mortgage-rate-forecast-fall-2026-what-experts-expect/)
2. RISMedia Real Estate News — [Inflation Cools to 2-Month Low, but the Future Is Murky](https://www.rismedia.com/2026/07/30/inflation-cools-to-2-month-low-but-the-future-is-murky/)

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Cite as: TrendWatcher, "US inflation eases to 3.7% in June, mortgage rates linger near 6.8%", https://www.trendwatcher.in/article/6b9d5ce5-75da-4b82-8579-65f929a4c7b8