10-year yield and mortgage rates
In the HousingWire forecast for 2026, it was predicted that mortgage rates would fall between 5.75% and 6.75%, while the 10-year yield would fluctuate between 3.80% and 4.60%.
- Despite a relatively stable period early on during the Iran conflict, mortgage rates spiked above 6.25% and ended the week at 6.41%, leading to worsening mortgage spreads and increased volatility in the market.
- While the 10-year yield is nearing its yearly high, mortgage rates have also reached their yearly peak due to deteriorating spreads. The chart below illustrates the trend of the 10-year yield over time.
Recent discussions on the HousingWire Daily podcast and CNBC’s Fast Money have highlighted the impact of the Iran conflict on housing market trends. With the PCE inflation report showing a 1% increase above the Fed’s target and ongoing military tensions, the potential for further rate hikes remains a concern.
As rates hit 6.41% by the end of the week, there is a growing focus on how these elevated rates will affect the housing market, especially considering past instances where rates above 7% have negatively impacted data trends.
Mortgage spreads
Despite the recent volatility, mortgage spreads have remained relatively stable in 2026, providing a buffer against rate fluctuations and reducing market uncertainty. However, a slight decline in spreads last week raised concerns about potential market risks.
Comparing current mortgage rates to historical spread levels reveals the impact of spread variations on overall rates, with higher spreads translating to significantly higher mortgage rates.
Weekly pending sales
Weekly pending sales data provides insights into short-term market trends, with recent weeks showing positive growth. However, the impact of rising rates on sales data remains a concern, as prolonged rate hikes could dampen sales activity.
Mortgage purchase application data
Positive year-over-year growth in purchase applications reflects a healthy market outlook, with consistent growth patterns indicating market stability. Weekly fluctuations in application data highlight seasonal trends and market dynamics.
Weekly housing inventory data
While housing inventory typically increases seasonally, recent growth rates have slowed compared to previous years. Despite a slight decline in year-over-year inventory growth, current levels remain healthy relative to past market conditions.
New listings data
New listings data, while showing a year-over-year decline, has seen a recent uptick in weekly figures. The seasonal shift in new listings is expected to drive market activity, with historical data providing context for current listing trends.
Price-cut percentage
Market dynamics, such as mortgage rates and inventory levels, influence the percentage of price cuts in the housing market. Current trends show a decrease in price-cut percentages compared to the previous year, reflecting shifting market conditions.
The week ahead: Iran, inflation, and the Fed meeting
Upcoming events, including the Fed meeting and ongoing Iran conflict, are expected to drive market sentiment in the coming week. Uncertainties surrounding the conflict and potential Fed policy changes may lead to increased market volatility and impact housing trends.