The 4 Big Market Moves You Missed This Week

The Bill Became Law. Inflation Surprised Everyone. And Warsh Had Some Things to Say. 

I don't know how this isn't getting more press but the housing bill is finally, really, IRL official. The 21st Century ROAD to Housing Act became law on July 11th. After months of bipartisan passage, a dramatic cancelled signing, a voter ID standoff, and a news cycle that had mostly moved on -- it became law. 

I've been talking your ear off about this bill since March. I told you it wasn't going to fix the housing shortage overnight. But I do think the people who have been following this story deserve to mark the moment. Thirty years of trying to pass meaningful federal housing legislation. It finally happened. In the middle of a war, a rate crisis, and the most chaotic political environment any of us have ever worked through. 

We'll take the W! 

What's Actually in It 

The bill does several things worth understanding before anyone tells you it fixed housing. 

Grants and forgivable loans for home repair and preservation. Easier pathways for converting vacant commercial and office buildings into residential units - which is genuinely significant given how much dead commercial real estate is sitting in urban markets right now. A suite of zoning reform incentives designed to encourage local governments to allow more density. 

What it does not do: address the construction labor shortage, fund lower-cost single-family development at scale, or meaningfully touch the 4 to 5 million unit deficit that has been building since 2008. The structural problem is decades in the making. This bill is a meaningful step in the right direction but far from the destination. 

The real impact will be felt in 18 to 36 months as projects get funded and permitted. Which means buyers in today's market cannot wait for this bill to save them. But the buyers in 2028 might feel it. 

The Plot Twist with CPI 

The June CPI report was released Tuesday morning with the best inflation print in over a year. The Consumer Price Index fell 0.4% for the month - the steepest monthly decline since April 2020 - driven by a 5.7% drop in energy costs. The annual inflation rate came in at 3.5%, down sharply from 4.2% in May. 

Economists had been expecting a drop of only 0.2% on the month and an annual rate of 3.8%. We beat on both. By a lot! 

Core inflation – which as you know strips out food and energy - was flat on the month, putting the 12-month rate at 2.6%. The consensus forecast was 2.9%. Also a meaningful beat… 

The market reaction was immediate. The 2-year Treasury yield fell more than 7 basis points to 4.185%. The 10-year yield declined more than 2 basis points to 4.583%. The S&P 500 gained 0.47% and the Nasdaq rose 1.08%. Market pricing for rate cuts in the second half of 2026 actually increased following the print! 

There has been speculation that the hot May inflation readings were the peak and these June numbers support that thesis. The energy shock from the Iran conflict drove inflation to 4.2% in May. Oil prices came down in June. And now we are seeing that reversal show up in the data exactly the way the timeline suggested it would. 

Of course there is a caveat or two. Core shelter inflation remained elevated despite the headline miss. The Fed watches services prices carefully and they are not done worrying. And the ceasefire collapsed last week - oil is climbing back toward $80 - which means the July CPI print could tell a very different story. The August 12th CPI report is your next data milestone. 

But for one Tuesday morning in July, the data gave us exactly what we needed for relief on mortgage rates. 

Warsh Before Congress 

Kevin Warsh appeared before the House Financial Services Committee on Tuesday and the Senate Banking Committee on Wednesday - his first congressional testimony as Fed Chair. 

Here is what he said that matters for mortgage rates: 

On inflation: "The inflation surge of the last five years will be a thing of the past" if the Fed gets monetary policy right. He called inflation "a tax on the American people." No shit Sherlock. 

On forward guidance: "Forward guidance isn't the business we should be in." He is not going to tell you where rates are going. He is going to look at the data and move accordingly. In my opinion, that may be logical but it makes the market uncomfortable because it’s not the norm. 

On the task forces: the five teams reviewing Fed communications, the balance sheet, economic data, labor market analysis, and inflation frameworks will share their findings with the 19 FOMC members first, then Warsh will present publicly. Any changes to the $6.7 trillion balance sheet will be telegraphed to markets before they happen.  Interesting right? 

On Trump pressure: when lawmakers pressed him directly on whether he would resist political interference, he did not flinch. The Fed chair who was supposed to deliver rate cuts for the president walked into Congress and delivered a price stability sermon. 

On AI: he pointed to the ongoing infrastructure buildout as a powerful economic force but acknowledged the impact remains uncertain. This matters because it is one of the variables that could actually help productivity and bring inflation down structurally - but the timeline is unclear. 

The market initially rallied on the good CPI print Tuesday morning and then partially gave back gains as Warsh's testimony reminded everyone that one good inflation reading does not change the Fed's posture. They are still data-dependent, still watching core services, still not promising anything. 

Builders are BACK 

This morning's housing starts report was the second best surprise of the week (behind CPI). 

Housing starts surged 19% in June to an annualized rate of 1.43 million - the highest since March and well above the consensus estimate of 1.31 million. That is a massive beat coming off May's numbers which were the lowest since 2020. 

Single-family starts came in at 895,000 - essentially flat with May's revised figure of 897,000. So the surge was driven almost entirely by multifamily - apartments and condos - which rebounded sharply after the previous month's historic drop. 

Here is the nuance worth noting. Building permits fell 3% to 1.367 million - below the 1.4 million consensus and 2.3% below June 2025 levels. Permits are the leading indicator - they tell you what builders plan to build in the coming months. The fact that starts surged but permits fell suggests builders are completing projects they already started rather than committing to new ones… 

I’m not trying to be pessimistic, just honest. Builders are cautious at 6.6% rates and with an ongoing war. 

What This All Means Right Now 

The Realtor.com midyear forecast expects rates to fall to 6.3% from the current 6.6% average. That is 30 basis points. On a $420,000 loan that is roughly $80 a month. It is also half the improvement needed to unlock 2.5 million additional potential buyers into this market.  We already talked about what happens then and I just explained how the supply problem is unlikely to be solved quickly.  Sellers and buyers need to consider that when figuring out their personal plans.