Welcome back to KPA Wealth. — The June Consumer Price Index (CPI) report just dropped, and while headline inflation ticked up 0.3%, pushing the annual rate to 2.7%, the real story is what’s happening underneath. Core inflation came in cooler than expected, giving both Wall Street and the Fed some cautious optimism.

• CPI Rises 0.3%, Year-Over-Year Jumps Slightly

• Why Foreign Buyers Are Returning to the U.S. Housing Market

• Today’s Mortgage Rates

CPI Rises 0.3%, Year-Over-Year Jumps Slightly

The headline inflation rate for June increased by 0.3%, which was in line with Wall Street expectations. On a year-over-year basis, inflation moved up from 2.4% to 2.7%, showing that while we are off the highs from 2022, inflation still has a pulse.

Here’s the kicker: a big reason this year-over-year number jumped is because June 2024 had a 0% reading, meaning we’re now replacing that ultra-low number with a moderate gain. That made the annual figure look worse than it really is in context.

Energy and Food Pushed the Headline Higher

A closer look shows that energy prices jumped 0.9%, with gasoline alone surging 1%. Food prices rose 0.3%. Together, they had an outsized effect on the headline CPI and painted a slightly hotter inflation picture than what people are actually feeling in their day-to-day purchases.

However, core CPI, which removes food and energy, only rose 0.2%, and that’s where things get interesting…

Core Inflation Cooler Than Expected: A Market Win

Markets were bracing for the worst, expecting core inflation to rise 0.3% on the month and hit 3.0% annually, but instead it came in at 2.9%. That might not sound like a huge miss, but when you're hanging on every basis point, 0.1% is the difference between a hawkish or dovish Fed.

Here’s what I liked:

• The 3-month core inflation trend is now running at 2.4%, up from just 1.7% in prior months

• The 6-month core trend held steady at 2.6%

• Annualized monthly core CPI for June was 2.2% — right in the Fed’s comfort zone

Personal Commentary: This report feels like the first real sign that the Fed’s patience might be paying off. Inflation is slowing — not crashing — and core readings are giving us the smooth descent the Fed has been begging for.

Cars, Food, and Tariffs: Minimal Impact So Far

Used car prices fell 0.7%, and new car prices dipped 0.3%. No sign yet of any inflationary wave from tariffs, despite worries that they’d start pushing prices higher. Food prices also appear to be well-behaved for now.

As someone who watches markets closely and talks with real estate clients daily, I can tell you: People are still spending — but more selectively. This cooling report reflects that shift.

🏠 Shelter Inflation Is (Finally) Easing

Here’s the real eye-opener: shelter inflation, one of the most stubborn drivers of CPI, rose only 0.2%, the lowest reading since 2021. Rents crept up 0.2%, and Owners’ Equivalent Rent came in at 0.3%. But the wild card, Lodging Away From Home, dropped a whopping 2.9%.

This helped shelter inflation (which makes up about one-third of the CPI index) remain tame.

Important Note: Shelter inflation is a lagging indicator. The data we’re seeing now reflects rental contracts from months ago. So this cool-down has been expected — but it’s good to finally see it reflected in CPI.

My Take: We knew it would show up eventually, and it’s nice to see it arrive. This could finally take pressure off mortgage rates, especially if it continues through Q3.

What Will the Fed Do Now?

This is where the rubber meets the road. While the Fed still wants to see more progress, this CPI report could give them the green light to start discussing rate cuts seriously — maybe even before the end of 2025.

The market is currently pricing in a high probability of a cut before the November election, and this report helps justify that optimism.

That said, the Fed still has to be cautious. They want to make sure inflation doesn’t flare back up, especially if tariffs, commodity prices, or housing surprise to the upside later this year.

Why Foreign Buyers Are Returning to the U.S. Housing Market in a Big Way

The U.S. housing market just saw a notable rebound in foreign investment, with international buyers snapping up $56 billion worth of existing homes between April 2024 and March 2025. That’s a sharp 33.2% jump from the previous year, reflecting renewed global confidence in American real estate. It’s also the first increase since 2017, a sign that the post-pandemic era may be reigniting global property ambitions.

Personally, I’ve noticed more conversations around cross-border real estate deals, especially in states like Florida and California. It’s no surprise Florida continues to lead the way, drawing 21% of foreign buyers, thanks to its lifestyle appeal and business-friendly environment. California, Texas, New York, and Arizona round out the top five.

The median price tag for these international purchases hit a record $494,400. Interestingly, nearly half of these deals were cash offers — which makes sense given today’s stubborn mortgage rates. Buyers from China, Canada, Mexico, India, and the UK topped the list, contributing billions into the market.

The rise in international real estate investment comes even before new tariffs were introduced in April 2025, which could affect next year’s numbers. Still, with the strong protection of property rights in the U.S., foreign investors continue to see American homes as a safe and valuable asset class.

This trend isn’t just numbers. It’s reshaping demand and competition, particularly at the upper end of the market — and creating opportunities for sellers and agents alike.

🏠 Today’s Mortgage Rates

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Kyle Allgair
CEO of KPA Wealth
📞 (279) 977-8149 | ✉️ [email protected]
🌐 KPAhomeloans.com

Kyle Allgair is the CEO of KPA Wealth, and is continuously helping clients build wealth through real estate and strategic financial planning. Contact him for personalized advice on achieving your financial goals.