What to expect from the Fed after the excellent inflation report

Living with Uncertainty

We’re all looking for a little certainty in this market, but, well, the expectations going into the year have not panned out. The war with Iran, especially the chaos with the Strait of Hormuz, has thrown a major wrench into the economy. 

We know that it’s not easy to live in this economic limbo. If you or your clients are feeling uneasy, that’s totally normal. 

Just remember: this too shall pass. We know from experience. When we started, the economy was still crawling out of the Great Recession.

There’s never a perfect time to be an agent. All you can do is focus on what you can control and build the habits and systems that put you in the best position to succeed.

Your future is shaped by the habits you repeat.

Keep that in mind when you read today’s Foundation Plans.

- David

Inflation cooled in July

US inflation eased in July, with the headline CPI falling to 3.4%, down from 3.5% in June and 4.2% in May. 

Core inflation, which excludes food and energy prices, also cooled to 2.5% annually, down from 2.6% in June and 2.9% in May.

Here are the other key takeaways to know:

• Forecasters nailed this one – The major inflation readings came in right in line with consensus expectations.

• Gas Prices fell in July – Gas prices dropped 2.9% from June, though they remained 25% higher than a year earlier and are expected to rise again in August. Food inflation also showed signs of moderating, which could provide some relief for consumers.

• September is still a toss-up until the next inflation report is published – With three more meetings left this year (Sept 15-16, Oct 27-28, Dec 8-9), market-implied odds of a September hike have moved from near-certain to roughly 50/50. If next month’s data looks similar, the odds of a rate hike will drop.

• Reports to keep an eye on – The July Personal Consumption Expenditures (PCE) report (Wed, Aug 26); the August jobs report (Friday, Sept. 4); and the August CPI Report (Friday, Sept. 11). Any of these could tip the Fed into hiking interest rates at its September meeting.

My take

This is about as good an inflation report as we could have hoped for. Inflation is still too high, but it’s moving in the right direction, and July’s numbers should take some pressure off the Fed to raise rates in September. The problem is that one good report won’t settle the debate. With energy prices still volatile and another round of inflation and jobs reports coming before the Fed meets, the next few weeks could have a lot to say about where interest and mortgage rates go from here.

Homebuilders with the highest rate of buydowns

In 2025, Lennar buyers received, on average, a mortgage rate that was 1.3 percentage points below the prevailing market rate after factoring in builder-funded buydowns.

That’s according to ResiClub’s analysis of the latest rate buydown data from AEI’s Housing Center.

Homebuilders have gotten aggressive with their incentive packages. In Q2 2026, Lennar spent the equivalent of 12.9% of a home's final sales price on incentives like rate buydowns — roughly $51,600 on a $400K home. In normal times, Lennar spends just 5% to 6%.

And Lennar isn't alone. Many of America’s largest homebuilders continue to lean heavily on mortgage rate buydowns to make monthly payments more affordable. 

Here are the top 5 homebuilders with the highest rate of buydowns:

1. Lennar

2. Meritage Homes

3. Sekisui House

4. Ashton Woods

5. D.R. Horton

My take

Ever since mortgage rates spiked in the summer of 2022, large homebuilders have leaned heavily on rate buydowns to get buyers through the door. There’s a reason: A dollar spent buying down a mortgage rate can provide more monthly payment relief than a dollar spent cutting the price of the home, while also helping builders protect their community comps. Keep this report handy. If you're working with cost-conscious buyers, you need to know what builders are offering, and how those incentives stack up against the resale market.

Markets with the steepest declines in luxury home prices

Nationwide, the entry point for luxury homes — defined as the top 10% of listings by price — fell to $1,250,750 in July, down 2.7% year over year, marking the 28th consecutive month of annual declines, according to Realtor.com’s latest report on the luxury market. 

But some metros are falling much faster. Austin posted the steepest decline in the country, with its luxury threshold dropping 9.6% year over year to $1,262,726 — more than three times the national rate.

Here are the 10 markets with the biggest year-over-year declines in the entry-level luxury price point:

For reference: The 90th percentile marks the entry point for luxury homes (top 10%); the 95th percentile represents high-end luxury; and the 99th percentile represents ultraluxury homes, which are often rare or custom properties.

1. Austin, TX: -9.6%

2. Boston, MA: -8.64%

3. San Francisco: -8.61%

4. San Diego: -7.3%

5. Washington, D.C.: -7.0%

6. San Jose, CA: -6.9%

7. Oxnard, CA: -6.0%

8. Denver: -5.9%

9. Charleston, SC: -5.5%

10. Bridgeport, CT: -5.5%

My take

Be careful how you read this report. The luxury market isn’t collapsing. A 9% price drop in Austin and an 8.6% drop in San Francisco look like the same story until you check how fast homes are actually selling: Austin's languishing at 78 days while SF is moving in 37, which basically means one market is genuinely correcting after its pandemic bubble and the other is just running out of inventory because rich AI money is scooping it up. The same discount means totally different things depending on whether you're negotiating with a motivated seller or racing other bidders for scraps.

Schematics

The news that just missed the cut

• Elon is building the largest building on Earth

• Family money is reshaping the luxury real estate market more than ever

• Use this to prevent clients from ghosting you

• What a cut to capital gains tax on home sales could mean for homeowners

• This is how data centers affect home values, property taxes, and utility costs

Foundation Plans

Advice from David to win the day

Prospecting leads is one of the most powerful skills you need to learn as an agent. More importantly, prospecting and building client relationships are your primary responsibilities. Everything else, even important and good things, is a distant second. Never let your pipeline go dry.  

I recommend spending at least two hours a day doing it. The more you do it, the more natural it will become. And while doing it, keep these things front and center: 

“Sell the sizzle” – People can sense your energy, mindset, and excitement through the phone. We call it “selling the sizzle.” Bring your best energy and passion to every call, and people will buy what you’re selling. 

Call with a goal in mind – Before you dial, know what you want to get out of the call, whether it’s a listing appointment, a partnership, a referral, or whatever it may be. Call with a goal and stick to it! 

Expect the objection – You will get a lot of no’s. That’s just the reality you have to get used to. I recommend having a handful of responses prepared to the most common objections you hear every day. That way the no’s don’t rattle you, and you’re always ready with a well-informed answer. You can actually use AI to up your sales skills. Watch this to get started. 

For more tips and some useful scripts on prospecting, start with this guide.

Just in Case

Keep the latest industry data in your back pocket with today’s mortgage rates:

“You’ve gotta keep control of your time, and you can’t unless you say no. You can’t let people set your agenda in life.” — Warren Buffett

Don’t let events or other people set your agenda. Stay ruthlessly focused on your goals — your time is limited, and you only get one life. Make the most of it. Have a wonderful week.

We’ll see you back here on Friday!

- David