The Longer This Lasts, The Worse It Gets for Sellers

If the conflict stretches through summer and into fall—through the midterms in November—energy prices stay elevated. Inflation stays sticky. Today's 4.2% print is proof that inflation isn't cooling as the Fed hoped. And mortgage rates, currently hovering around 6.66%-6.75%, face genuine upside risk of another 0.375% to 0.435%.

That's not catastrophe. It's math. And it's happening in real time.

What today's inflation data actually signals

The Fed has been holding rates steady, betting that inflation would cool on its own. Today's number proves that strategy isn't working. Inflation spiked from 3.8% in April to 4.2% in May. That's not noise. That's a reversal.

The culprit? Energy prices. Oil has been volatile all year because of the Iran conflict. Every time peace talks break down—like they're doing right now—oil spikes. Every oil spike feeds back into inflation. And every inflation spike means the Fed has to stay hawkish.

The Fed's next meeting is June 16-17, just six days away. When they see today's 4.2% print combined with crude oil at $89, expect them to signal: "We're staying put. Rates aren't coming down anytime soon."

What that means for your timing

Central Vermont's market is holding. Inventory is tight. Prices are stable. Move-up buyers with equity are still moving, albeit more carefully than they were six months ago.

But here's what changes if rates tick another 0.375%:

A buyer pre-approved at $650,000 at 6.75% doesn't qualify at $650,000 at 7.125%. The math shifts. Their buying power drops. They either reduce their offer by $30,000-$40,000, or they step out of the market entirely.

Multiply that across dozens of buyers in the move-up segment, and suddenly the inventory that's tight becomes constrained. The market that's been holding starts to slow.

The base case vs. the risk case

Logan Mohtashami's 2026 forecast was straightforward: mortgage rates between 5.75% and 6.75%, with the upper end (6.375%-6.75%) most likely if labor data stayed firm and inflation remained sticky.

We're in the upper range. That's the base case. It's workable.

But today's inflation print plus ongoing Iran tensions point toward the risk case: rates could push toward 7% or slightly beyond. That's the upside risk. And it just got more real.

What an election result won't change

Polling suggests Democrats have a reasonable chance of flipping the House in November. If that happens—or if they gain seats in the Senate—markets might briefly reprice. But here's what actually matters for rates: it won't change the trajectory.

Why? Because the Iran conflict doesn't care about U.S. elections. It runs through November regardless. Energy prices stay elevated. Inflation stays sticky. Today's 4.2% print shows us that inflation isn't self-correcting—it's still climbing.

The Fed's hawkish stance—which is already baked in—doesn't shift because of a change in Congressional leadership.

In a divided government scenario (most likely: Democratic House, Republican Senate), you don't get major fiscal changes that would loosen monetary policy. You get gridlock, which means the Fed stays the course. Rates stay higher for longer.

If somehow Democrats sweep both chambers, you might get fiscal stimulus, which could actually keep inflation higher, not lower. More stimulus + sticky inflation = Fed stays even more hawkish.

So betting on an election outcome to move the rate needle is a mistake. The structural headwinds—today's inflation spike, elevated oil prices, geopolitical uncertainty—are bigger than any political outcome in November.

Why this matters for Vermont sellers right now

You have clarity on your market today. You know what rates are. You know what buyers are willing to pay. You know the seasonal momentum is still in your favor—June and July are still strong months.

But if rates climb another quarter point in August—and today's inflation print makes that more likely—that clarity evaporates. The buyer who was comfortable at $700,000 in July might not be comfortable at $700,000 in September. The move-up seller who was planning a September listing suddenly realizes they should have listed in June.

The timeline

The Fed's next meeting is June 16-17. They'll see today's 4.2% inflation print and elevated oil prices. Expect cautious language about "data dependency" and "remaining vigilant." That caution translates to: rates probably don't come down soon. They might even go up.

Summer goes into fall. The midterms are in November. If the conflict is still unresolved by then—and peace talks are already faltering—that's 10+ months of elevated energy prices and sticky inflation. That's a long time for buyers to feel uncertain about rates.

Use your window now. The runway between "rates are stable at current levels" and "rates have climbed another 0.375%" just got shorter.

What to do

For sellers: List decisively. Price realistically. Close fast. Today's inflation data is a signal that the Fed won't be cutting rates. The market will hold through summer, but don't count on fall.

For move-up sellers: Solve your buyer problem before you create your seller problem. Get clear on where you're going before you list where you are. Today's rate environment is the best you're going to see for a while.

For buyers: Expand your options. Use every tool. Know your actual numbers. Move when conditions are clear. Waiting for rates to fall isn't a strategy anymore. Today's inflation print proves that.

Vermont's market is resilient. But resilience doesn't mean complacency. It means moving strategically inside the conditions you have, not waiting for conditions to improve—whether that's hoping rates will fall or betting on an election outcome that won't change the fundamental math.

The Iran conflict is still escalating. Oil prices are still elevated. Inflation just spiked. And the Fed's next move is almost certainly "hold steady," not "cut rates."

Act accordingly.