The housing market has remained resilient through a mix of higher inflation, elevated oil prices, and mortgage rates that have stayed inside the broader range outlined in the 2026 HousingWire forecast. Even so, the latest data point to a modest cooling in demand as rates spent most of the week above 6.64%, a level that has mattered in recent years for housing activity.
According to the report, mortgage rates and the 10-year Treasury yield have continued to move within the forecast bands of 5.75% to 6.75% for mortgage rates and 3.80% to 4.60% for the 10-year yield. The renewed Iran conflict has added another layer of uncertainty, while recent hawkish comments from the Federal Reserve have kept upward pressure on bond yields. The article notes that housing demand has tended to weaken when mortgage rates rise above 6.64%, and that a further escalation in the conflict could amplify that effect.
Improved spreads have kept rates lower than they otherwise would be
A key reason the market has not deteriorated more sharply, the report says, is the improvement in mortgage spreads this year. Without that change, rates would be meaningfully higher than they are now. The article compares current conditions with prior years and says that if spreads had remained at the weaker 2023 level, today’s mortgage rate would be 7.77%. Using 2024 or 2025 spread levels would still imply rates above 7%, at 7.40% and 7.20% respectively. Last week, spreads measured 1.97%, up slightly from 1.95% the week before, above the historical range of 1.60% to 1.80%.
Early demand indicators also softened. Weekly pending home sales were essentially flat compared with a year earlier, coming in at 66,654 versus 66,680, after the usual post-holiday rebound from the Fourth of July slowdown. Purchase application data also weakened, falling 7% week over week and posting a 2% decline from the same period a year earlier. The report says the year-over-year comparisons will get tougher from here because the market shifted in mid-June last year, making the next stretch of data especially important if rates remain near current levels or move higher.
Source: housingwire.com
