Economic Update | Month Ending May 31, 2026

Geopolitical tensions and the growing conflict in the Middle East pushed oil and gas prices higher in May, which also contributed to an increase in Treasury bond yields and mortgage rates as investors worried about inflationary pressures and the potential impact on the global economy. The 10-year Treasury yield moved higher, and mortgage rates followed, creating additional affordability challenges for homebuyers and putting some pressure on the housing market.

Despite higher rates and global uncertainty, the stock market rebounded as investors focused on resilient corporate earnings, continued consumer spending, and hopes that inflation may remain contained enough for the Federal Reserve to eventually ease monetary policy later this year. Technology and AI-related stocks continued to lead much of the market’s recovery, helping offset concerns about higher energy prices and slowing economic growth.

Mortgage rates – Every Thursday, Freddie Mac publishes interest rates based on a survey of mortgage lenders throughout the week. The Freddie Mac Primary Mortgage Survey reported that mortgage rates for the most popular loan products as of May 28, 2026, were as follows: The 30-year fixed mortgage rate was 6.53%, up from 6.30% last month. The 15-year fixed was 5.87%, up from 5.64% last month. The graph below shows the trajectory of mortgage rates over the past year.

The graph below shows the trajectory of mortgage rates over the past year.

May inflation release shows that the Consumer Price Index jumped to a 3-year high inflation rate in April – The Consumer Price Index was released this week. It showed that consumer prices for all goods increased 3.8% year-over-year, the highest annual inflation rate in three years. Just a few months ago, in February 2026, before the war began, inflation had fallen to 2.4%, its lowest annual rate in three years. After the war started, the CPI rate jumped from 2.4% in January and February to 3.3% in March and 3.8% in April. Fortunately, core inflation, which excludes food and energy, came in at 2.8%. That indicates that, at least for now, much of the recent increase in inflation is being driven by higher gas and energy prices rather than broad-based inflation throughout the economy. Analysts remain hopeful that overall inflation could begin to moderate again once tensions in the Middle East and the Strait of Hormuz are fully reopened to unrestricted oil shipments. One-fifth of the world’s oil supply passes through that region. Any disruption can quickly impact energy prices worldwide and, in turn, inflation here in the United States.

Stock markets – Dow Jones Industrial Average closed the month at 51,032.36, up 2.8% from 49,652.14 on last month. The Dow is up 6.2% year-to-date from 48,063.29 on December 31, 2025. The S&P 500 closed the week at 7,589.06, up 5.3% from 7,209.01 last month. The S&P is up 10.9% year-to-date from 6,845.50 on December 31, 2025. The Nasdaq closed the week at 26,792.62, up 7.6% from 24,892.31 at the end of April. The Nasdaq is up 16.1% year-to-date from 23,241.99 on December 31, 2025.

U.S. Treasury Bond Yields – The 10-year U.S. Treasury bond yield closed the month at 4.45%, up from 4.32% on April 31, 2026. The 30-year US treasury bond yield ended the month at 4.99%, up from 4.91% on April 31, 2026. We watch bond yields because mortgage rates often follow treasury bond yields.

Home sales figures are released on the third week of the month for the previous month by the National Association of Realtors and the California Association of Realtors. Here is a summary of the April existing home sales reports.

U.S. existing-home sales – April 2026 – The National Association of Realtors reported that existing-home sales totaled 4.02 million units on a seasonally adjusted annualized rate in April, up from 3.98 million in March, and unchanged from the number of homes sold last April. Year-over-year home sales were down 1% from the number of homes sold last March. The median price paid for a home in the U.S. in March was $417,700, up 0.9% year-over-year from $414,000 last April.

California existing-home sales – The median price soared 7.1% in April as inventory tightened – The California Association of Realtors reported that existing-home sales totaled 275,580 on an adjusted annualized basis in April, up 4.1% from 264,810 annualized sales last April. The statewide median price paid for a home was $914,810 in April, up 7.1% from $889,190 in March. Year-over-year, April’s median price was up 0.4% from $911,400 one year ago. The increase in the median price was attributed to more homes selling in a higher price range than the lower range, as higher price range buyers have been less impacted by gas prices, inflation, etc. They also have more money in the stock markets, which are at or near record highs.

Below is the housing data for Southern California by County.