Iran conflict
Traditionally, when there was military conflict in the Middle East, money would flow into the U.S. dollar and the U.S. bond market as a safe haven, and oil prices would rise. However, in recent years, this trend has not been as pronounced.
Traders seem to believe that the events in the Middle East are being contained and do not fear a wider escalation. With the upcoming midterms, there is less concern about a prolonged war with Iran, as President Trump tends to prefer quick resolutions to military actions.
We will closely monitor the trading activity on Sunday night and the market reaction on Monday morning regarding the Iran situation. The supply of oil through the Strait of Hormuz will be a key factor to watch. Despite recent volatile headlines, the bond market and mortgage rates have not experienced significant fluctuations this year. The attack on Iran will serve as another test for market stability.
10-year yield and mortgage rates
In the 2026 HousingWire forecast, projected ranges included:
- Mortgage rates between 5.75% and 6.75%
- The 10-year yield fluctuating between 3.80% and 4.60%
Despite positive jobless claims and PPI inflation reports, Friday saw unexpected movements in the 10-year yield and mortgage rates. While one might have anticipated an increase, factors such as negative sentiment on AI and potential insights on the Iran situation led to a different outcome. This week’s focus will be on the market’s response to the Iran conflict and the upcoming jobs data.
The 10-year yield closed at a 2026 low and rates ended the week lower at 5.99%, according to Mortgage News Daily, while Polly’s mortgage rate lock data shows a weekend rate of 6.23%.
Mortgage spreads
Mortgage spreads continue to be a positive factor for the housing market in 2026, reducing mortgage-rate volatility and nearing normal levels.
Historically, mortgage spreads have ranged from 1.60% to 1.80%. Last week’s spreads closed at 1.93%.
If spreads returned to peak 2023 levels, mortgage rates would be significantly higher. However, with spreads stabilizing, mortgage pricing can remain lower for an extended period. Realistically, there is limited room for further improvement in spreads, but sustained stability is crucial for future developments.
Weekly pending sales
Pending home sales data offers a week-to-week perspective on market trends, although external factors like weather can influence results. After experiencing year-over-year growth at the beginning of the year, recent positive trends were interrupted by adverse weather conditions.
Following consecutive weeks of positive year-over-year growth, the market is showing signs of recovery. Monitoring weekly pending sales data provides valuable insights into future housing trends.
Comparing weekly pending sales over the last two years:
- 2026: 63,209
- 2025: 60,410
Mortgage purchase application data
Purchase application data serves as a forward-looking indicator, with growth in this area leading to sales growth in the coming months. Recent data has shown positive year-over-year growth, indicating a strengthening market.
Consistent weekly growth, along with sustained year-over-year improvement, is a positive sign for market stability. The seasonal nature of the data adds another layer of insight into market trends.
Current trends in 2026 show:
- 2 positive week-over-week prints
- 4 negative week-to-week prints
- 1 flat week-to-week print
- 4 weeks of double-digit year-over-year growth
- 7 weeks of positive year-over-year growth
Weekly housing inventory data
Recent data on housing inventory showed a decline, which is not uncommon for this time of year. Anticipating a seasonal increase in inventory starting in March, market observers are hopeful for a return to healthier levels.
Comparing year-over-year inventory growth, there has been a notable decrease from previous highs. Last week’s inventory change reflects this trend.
- Weekly inventory change (Feb. 20-Feb. 27): Inventory fell from 700,259 to 690,357
- Same week last year (Feb. 21-Feb. 28): Inventory fell from 640,221 to 639,357
New listings data
New listings data experienced a weekly decline, likely due to seasonal variations. Market observers anticipate an increase in new listings during peak months, reflecting historical norms.
Comparing last week’s new listings data over the past two years:
- 2026: 50,245
- 2025: 60,410
Price-cut percentage
Price reductions are common in the housing market, with about one-third of homes undergoing price cuts before selling. Recent trends indicate a decrease in price-cut percentage due to lower mortgage rates and stabilized inventory levels.
As demand increases and inventory growth slows, the price-cut percentage is expected to decline. Monitoring year-over-year data provides valuable insights into market dynamics.
Last week’s price-cut percentage is now 1.25% lower than the previous year.
Weekly price-cut percentage:
The week ahead: Iran, jobs week, retail sales and more
This upcoming week is anticipated to be eventful, with the Iran situation and jobs data taking center stage. Additional reports on retail sales, Fed speeches, and jobless claims add to the market’s complexity.
While mortgage spreads have improved market stability, volatility remains a key factor to watch. Monitoring the bond market’s reaction to the upcoming jobs data will provide valuable insights into market trends.