August 2025 mortgage rates drifted toward the year’s lows as disinflation firmed, and Treasury yields eased. Headline CPI rose 0.4% month over month and 2.9% year over year in August, while core CPI increased 0.3% and 3.1%, respectively. Producer prices told a similar story. Final-demand PPI edged down 0.1% in August and was up 2.6% annually; core PPI rose 0.3% monthly and 2.8% year over year. Together, these cooler inflation readings reduced rate pressure into early September.

The latest data shows that inflation continues its epic climb while home sales rapidly recover across the country. As a result, the outlook on economic growth and future Fed policy remains stagnant. The Fed stated that their core PCE target is 2.0%. In May 2021, core PCE rose 3.4% higher than a year ago. While this is slightly below the consensus forecast, core PCE jumped up from an annual rate of increase of 3.1% in April.