The headline Producer Price Index was unchanged in July. Real estate investors should not interpret that result as evidence that renovation and construction costs are falling.
The underlying report showed that prices for final-demand construction increased 2.2% in one month. Lumber prices increased 5%.
At the same time, new retail and housing data suggest investors must also remain conservative about the eventual resale exit. A successful project requires control of both sides of the transaction: the cost to complete and the ability to exit.
Market Snapshot
| Final-demand PPI | Unchanged in July; up 4.7% annually |
| Final-demand construction prices | Up 2.2% in July |
| Lumber prices | Up 5% in July |
| July retail sales | Down 0.6% monthly; up 5% annually |
| July existing-home sales | Down 1.7% monthly |
| Median existing-home price | $434,100 |
| 10-year Treasury | 4.63% on August 13 |
| Freddie Mac 30-year benchmark | 6.67% |
The Inflation Headline Concealed Construction-Cost Pressure
The Bureau of Labor Statistics reported that the Producer Price Index for final demand was unchanged during July.
Goods prices declined 0.7%, partly because energy prices fell 3.1%. Services prices increased, offsetting the goods decline—but construction-specific costs still rose 2.2% for the month, with lumber up 5%.
Existing-Home Sales Point to a Cautious Buyer Pool
NAR reported that existing-home sales fell 1.7% in July to a seasonally adjusted annualized rate of 4.06 million.
Inventory totaled 1.54 million properties, representing 4.6 months of supply. The median existing-home price increased 2% from one year earlier to $434,100.
For a flipper, those figures support two different conclusions: home prices have not broadly collapsed, and buyer activity remains constrained enough that an aggressive exit should not be assumed.
Rates Improved Modestly
The 10-year Treasury declined from 4.68% on August 12 to 4.63% on August 13. The 30-year Treasury declined from 5.24% to 5.21%.
Freddie Mac’s 30-year mortgage benchmark averaged 6.67% on August 13, compared with 6.69% one week earlier.
Freddie Mac’s survey reflects conventional owner-occupied mortgage applications. It is not a bridge, DSCR or construction-loan quote — but it is still relevant to investors because it helps describe the financing environment facing the eventual buyer of a renovated property.
ACP Financing Focus: Fix-and-Flip and Ground-Up Construction
ACP Real Estate Lending can evaluate eligible acquisition, renovation and new-construction projects. Potential underwriting considerations include:
- Property address
- Purchase price or land basis
- Current property condition
- Complete project budget
- Borrower or builder experience
- Current value and estimated completed value
- Requested leverage
- Liquidity and reserves
- Construction timeline
- Draw schedule
- Exit strategy
- Estimated FICO
Investor Takeaway: Run Two Separate Stress Tests
Project-cost test. Calculate the result if construction costs increase, work takes longer, a contractor must be replaced, insurance is higher than estimated, or additional interest and holding expenses are incurred.
Exit test. Calculate the result if the resale price is lower, marketing takes longer, the buyer requests closing-cost assistance, a mortgage-rate buydown is necessary, or selling expenses exceed the initial estimate.
If either stress test eliminates the expected profit, the deal does not have an adequate margin for error.
Sources: U.S. Treasury — August 13, 2026. Freddie Mac — August 13, 2026. NAR July existing-home sales report — August 11, 2026. Financing is subject to property review, appraisal, documentation, lender guidelines and final approval. This is not a commitment to lend.