Housing Backdrop Key Variable Changed; Sentiment Inflection Differs by Income Strata; Spend Remains Positive with Slight Deceleration: Macro Monday

By David Schick and Jonathan Feeney and David Katzman and Jack Hermann Published on June 22, 2026 PDF

Summary: (1) Our math shows Consumer Velocity decelerated slightly last week which syncs up well with many of our industry conversations on tone of business, see Fig 1; (2) Housing inventory is approaching flat y/y, an important regime change after spending the last two years up meaningfully y/y, see Fig 3-6; (3) Gas prices have significantly retreated from highs, but sticky gas inflation remains the dominant macro signal at +41% y/y T4W, see Fig 7; (4) Sentiment moved higher m/m after hitting all-time lows (44.8) last month, we note lower-income and higher-income Sentiment had very different sequential moves, see Fig 9-12; and (5) the Wealth Effect Index had slight deceleration this week after increasing for 12 consecutive weeks as equity markets had been a driver, see Fig 13-16.

Our Consumer Velocity tracker softened further this week, with the T4W down to +2.1% y/y from +2.6% the prior week, while the T12W trend also decelerated to +2.4% y/y (from +2.7%). The underlying trend remains soft (roughly 0.5 standard deviations below the post-2022 average on both a T4W and T12W basis). The T4W vs. T12W inflection was −0.2 pts, the second consecutive week (and 8th in the last 9 weeks) of shorter-term growth lagging longer-term, with the gap widening from roughly flat the prior week. See Fig 1-2.

Housing inventory is now flat y/y which is a key shift in dynamics after two years of strong double digit growth y/y. This is, of course, not to say velocity will take off right away and drive home-related spending. Borrowing costs remain elevated, prices flat as supply continues to decelerate. But inventory overhang meant a frozen environment – now buyers and sellers are more matched. There is typically a six month lag from more home turnover to more home-related spending, we will start that clock as we see any improvement in pace. Roughly 18% of US GDP is related to the selling, building, fixing, lending to, and furnishing of homes – velocity matters for the broader economy including wages. US 30Y FRM rate is up to 6.47%, running down -35 bps y/y on a T4W basis (0.6 standard deviations below average since 2020). US for-sale inventory up only 1.3% and has linearly decelerated from +28% from the same time last year. MBA’s mortgage applications for purchase index is running up +3% y/y while refinance applications index is running up +14% y/y. Median home prices are flat y/y. See Fig 3-6.

Gasoline inflation continues to decelerate sharply, with the latest weekly print up +28% y/y (down from +37%), the T4W now at +41% y/y, and the T12W at +55% y/y. The T4W trend is about 0.7 standard deviations above average, and the T4W vs. T12W inflection has deepened to −14.3 pts (from −6.8), with the shorter-term pace now running well below the longer-term trend. We continue to flag that utilities (electricity and heating fuel) run about 9% of lower-income household spending vs. 4% for higher-income households, compounding the squeeze at the bottom of the income distribution. See Fig 7-8.

Sentiment ticked up off last month’s all-time low (44.8) to 48.9, but it remains the second-lowest reading on record and the y/y decline steepened to -19% this month. Overall, headline Sentiment is down -19% y/y this month alone and down -13% on a T3M basis (1.1 standard deviations below average) and -19% y/y on a T9M basis (1.8 standard deviations below average). Upper-third income Sentiment is down -7% y/y on a T3M basis (0.6 standard deviations below average), after declining -1% y/y T3M last month. Middle-income Sentiment is down -16% y/y on a T3M basis (1.2 standard deviations below average) after declining -11% y/y T3M last month, and lower-income Sentiment has declined -18% y/y on a T3M basis (1.5 standard deviations below average) compared to -15% last month, although lower-income Sentiment is up +29% m/m. See Fig 9-12.

Consumer “Wealth Effect” decelerated slightly this week. Optimal Advisory’s Wealth Effect Index is at +16.1% y/y (down from +16.4% y/y last week and 0.6 standard deviations above average since the start of 2022 after running higher w/w for 12 consecutive weeks). With home prices flat y/y and despite headwinds from lower crypto prices we note the “flywheel” of wealth effect remains elevated off strong equity returns. See Fig 13-16.

Our Multifactor Macro Market Model has been suggestive of March 2026 softness, rebound. Optimal’s Multifactor Macro Market Model projects the S&P 500 as well as bull and bear cases based on lagged data for 12 macroeconomic factors. The model suggested the S&P 500 to fall to just below 6000 by March, before rebounding back up to 6400 by May. We use this model as a guide to how macro would guide the market, given our analysis of current variables. This is, of course, outside of other factors at work. See Fig 17-18.

Figures 1-2: Optimal Advisory Consumer Velocity Monitor

Source: Optimal Advisory Analysis, Bloomberg Second Measure

Consumer Spending y/y Relative to Historical Average

Source: Optimal Advisory Analysis, Bloomberg Second Measure

Figures 3-6: Housing Kinetic Energy

Source: Optimal Advisory Analysis, Freddie Mac, Zillow, Redfin

Mortgage Rates, For Sale Inventory, & Median List Price y/y Relative to Historical Averages (Since 2020)

Source: Optimal Advisory Analysis, Freddie Mac, Zillow, Redfin

Figures 7-8: Gas Prices y/y

Source: Optimal Advisory Analysis, Bloomberg

Gas Prices y/y Relative to Historical Averages (Since 1992)

Source: Optimal Advisory Analysis, Bloomberg

Figures 9-12: Consumer Sentiment T3M and T9M y/y

Sentiment y/y by Income Tercile Relative to Historical Averages

Comparison of Sentiment y/y Across Income Terciles

Source: Optimal Advisory Analysis, University of Michigan Consumer Survey

Figures 13-16: Consumer Wealth Effect & Components y/y

Source: Optimal Advisory Analysis, Bloomberg, Zillow, Redfin

Median Home Price y/y, S&P 500 y/y, & Wealth Effect Index (Since 2022)

Source: Optimal Advisory Analysis, Bloomberg, Zillow, Redfin

Figures 17-18: Optimal Advisory Multifactor Macro Market Model

Historical Test Predictions vs. Actual (On Test Data Only)

Source: Optimal Advisory Proprietary Analysis, Bloomberg, FRED, BLS, BEA, OECD, University of Michigan Consumer Sentiment Survey, U.S. Census Bureau, FRB

Actual & Projected S&P 500 (Including Training & Test Data) with Confidence Intervals

Source: Optimal Advisory Proprietary Analysis, Bloomberg, FRED, BLS, BEA, OECD, University of Michigan Consumer Sentiment Survey, U.S. Census Bureau, FRB

Figure 19: Index & Sector Performance

Source: Optimal Advisory Analysis, Bloomberg, prices at market close 6/18/2026

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