What happened to mortgage rates this week?
The Freddie Mac 30-year fixed mortgage rate fell 5 basis points to 6.48% this week, in line with expectations. The 10-year Treasury yield held below 4.5% through the end of last week before climbing slightly early this week, which gave mortgage rates enough room to relax a bit. The news surrounding a ceasefire in Iran has been uneven, to say the least. At times, the market seems to react positively to diplomatic developments; then, soon after, we hear about missiles being fired or talks breaking down. This conflict is currently the main driver of still-high mortgage rates, as the oil shock ripples inflation fears throughout the global economy. We expect to see further mortgage rate relief once the Strait of Hormuz is opened for good.
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What does this mean for the housing market?
This week’s rate reduction is welcome news for would-be buyers who have been reluctant to purchase in 2026 despite market conditions moving strongly in their favor. Listing prices have now fallen on a year-over-year basis for seven straight months, the inventory of homes for sale is the highest it has been since before the COVID-19 pandemic, and time on the market continues to slow. Despite these flashing green lights for buyers, high mortgage rates and low consumer sentiment stemming from the war in Iran have led to only a 2.6% year-over-year improvement in the number of contract signings in May. The housing market is ready for takeoff, but further rate relief and stronger buyer confidence are needed to end the ground stop.
