America In Focus: US economy expands at sluggish pace, mortgage rate hit the highest level in a year

The U.S. economy experienced a period of sluggish growth in the second quarter of 2026, with the gross domestic product (GDP) expanding at an annual rate of 1.5 percent from April through June. This marks a deceleration from the 2.1 percent growth observed in the first three months of the year, falling below economists' expectations. While consumer spending showed resilience, rising imports contributed to the overall slowdown in economic expansion.

Amidst this moderated economic activity, inflation continues to present a challenge. The Federal Reserve's preferred measure of inflation, the personal consumption expenditures (PCE) price index, increased by 3.7 percent in June 2026 compared to the previous year, remaining above the central bank's 2 percent target. Core consumer prices, excluding volatile food and energy, also rose by 3.3 percent over the same period.

Concurrently, mortgage rates have climbed to their highest levels in nearly a year, significantly impacting housing affordability. As of mid-to-late July 2026, the average 30-year fixed-rate mortgage reached approximately 6.55 percent to 6.76 percent, a level not seen since August 2025. This increase in borrowing costs makes homeownership more challenging for many prospective buyers.