Key facts
- US mortgage rates ended last week at 7.12%, up from a low of 5.99% this year.
- The 10-year Treasury yield rose toward 5% amid escalating conflict in Iran.
- Mortgage spreads widened to 1.92% last week, down from 1.94% the prior week.
- Housing inventory fell to 873,978 units in the week ending September 11.
- New listings for the week of September 11 were 58,803.
- Price reductions were seen on 42.08% of homes last week.
US mortgage rates have surpassed 7%, reaching 7.12% last week, a significant increase from the year's low of 5.99%. This rise is attributed to escalating geopolitical tensions in Iran, which have driven the 10-year Treasury yield higher, nearing 5%. Historically, mortgage rates above 6.64% have led to fading housing demand, and current levels are expected to further impact the market.
Mortgage spreads, the gap between mortgage rates and the 10-year Treasury yield, widened to 1.92% last week, though this was narrower than they could have been given the yield's movement. If spreads had mirrored those of 2023, rates would be at 8.31%; for 2024, they would be 7.94%; and for 2025, 7.%. The current spread is down from 1.94% the previous week.
Housing inventory saw a slight decrease to 873,978 units in the week ending September 11, influenced by holiday impacts. New listings also declined seasonally to 58,803 for the week. Price reductions were applied to 42.08% of homes, a slight increase from the previous week. Pending home sales for 2026 stood at 56,255, down from 62,185 in 2025, reflecting the slowdown in demand as rates climb.
Looking ahead, the market is anticipating a Federal Reserve rate hike, with the conflict in Iran seen as a more significant driver for bond markets and mortgage rates than the Fed's decision. Upcoming retail sales and housing data are also expected to show weakness.