What happened to mortgage rates this week?
The Freddie Mac 30-year fixed mortgage rate held mostly steady this week, falling just 2 basis points to 6.67%. Despite the slight reduction, this is still an elevated level, as the rate last year at this time was 6.58%. The 10-year Treasury yield has increased only slightly this week as the conflict in Iran has drawn on, putting pressure on oil prices and thereby expectations of future inflation.
Wednesday’s CPI print came in right in line with expectations, having little impact on the markets. While it’s certainly good news that inflation did not surprise us by coming in hotter than expected, a cooler readout could have given the Federal Reserve more pause on what looks like an upcoming rate hike before the end of 2026 after holding rates late last month.
All told, there is little downward pressure on mortgage rates between a Middle East conflict that’s keeping inflation high and a Federal Reserve that’s laser-focused on driving that inflation lower. Current mortgage rate levels may become quite familiar in the months ahead.
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What does this mean for the housing market?
The housing market would welcome lower rates, as the pace of home sales has slowed this summer following a stronger spring. Financing costs are one of the few things that have not moved in buyers’ favor this year as listing prices continue to drop, time on the market remains far slower than during the COVID-19 pandemic period, and price reductions have picked up pace even in the Northeast and Midwest recently.
The low home sales totals of the past three or so years suggest some latent demand: buyers that would be active if not for the affordability constraints facing them. Mortgage rates are a key component of those constraints, and would-be buyers are highly sensitive to them. In some parts of the country, though, home sales continue at a torrid pace in spite of stubbornly high mortgage rates. These are represented in our Hottest ZIP Codes of 2026. For more widespread market hotness, though, we will likely need mortgage rates to fall well below their current levels.
