Mortgage rates are stuck near 6.5%. A new housing law may make buying easier – eventually
Spring Homebuyers Face Continued Challenges as Rates Hold Steady
Mortgage rates are stuck near 6 5 – As the traditional spring homebuying season draws to a close, prospective purchasers may find themselves disappointed once again. Despite hopes for improved affordability, the ongoing tensions with Iran alongside subsequent inflationary pressures have maintained mortgage rates at stubbornly elevated levels. Compounding this uncertainty are growing concerns that the Federal Reserve might increase interest rates to manage rising price pressures. Meanwhile, a bipartisan housing legislation designed to expand supply and alleviate some affordability constraints over the coming years is poised to automatically become law at midnight transitioning from Friday into Saturday, barring a presidential veto from Donald Trump.
Mortgage Rates and Market Dynamics
This week, Freddie Mac reported that the average 30-year fixed mortgage rate stood at 6.49%, positioning itself near the year’s peak levels. These mortgage rates generally follow the trajectory of the US 10-year Treasury yield, which maintains a strong connection to inflation expectations. The yield, which moves inversely to bond prices, has stayed elevated as market participants express concern that elevated oil prices combined with Middle Eastern conflicts could generate persistent inflation and ultimately prompt interest rate increases from the Federal Reserve.
A preliminary agreement between the United States and Iran had previously eased some bond market anxieties. However, tensions resurfaced this week when the US conducted additional strikes against Iran, causing both oil prices and the 10-year yield to climb higher.
Looking Ahead: What Experts Predict
Despite these recent economic disruptions, Zillow maintains its projection that mortgage rates will gradually decline to approximately 6.3% by the conclusion of 2026. This forecasted rate would remain above the levels observed at the end of 2025. Kara Ng, a senior economist at Zillow, provided context for this outlook:
If rates end 2026 near 6.3%, that would be slightly higher than the range buyers saw in fall and winter 2025 — meaning affordability could shift from a tailwind relative to last year to more of a headwind.
There are emerging indicators that mortgage rates persistently remaining above 6% are causing certain buyers to wait on the sidelines. According to a report published Thursday by the National Association of Realtors, existing home sales experienced a 2.4% decline in June compared to May. This represents a setback during what should be the housing market’s most active spring period. Nevertheless, when compared to June of the previous year, sales actually increased by 2.8%.
Housing Supply and Legislative Solutions
Lawrence Yun, chief economist at NAR, commented on these trends:
The back-and-forth in monthly home sales activity, driven by mild fluctuations in mortgage rates, shows how sensitive home buyers are to affordability conditions.
Even with the recent sales decline, the median price for existing home sales continues its upward trajectory, reaching a record high of $440,600 for the month of June according to NAR data. Mortgage rates represent only one component of the broader housing affordability equation. A chronic shortage of homes available for sale has simultaneously driven prices upward as buyers compete for fewer properties.
Last month, Congress approved the 21st Century Road to Housing Act, legislation specifically designed to increase housing supply in the marketplace. The bill seeks to facilitate the addition of manufactured homes—structures constructed off-site in factory settings. Additionally, it provides grants and forgivable loans for repairing existing homes that have deteriorated, alongside other provisions intended to strengthen market supply.
Trump unexpectedly chose to cancel the formal signing ceremony for the bill last month, which would have immediately enacted it into law. Through a social media message, Trump characterized the legislation as “of minor importance compared to lower interest rates” and subsequently described it as a “big yawn.” Nevertheless, should Trump refrain from vetoing the bill before Friday evening, it will automatically become law. Industry experts note that while the legislation may not immediately transform home prices or availability across most regions, gradual improvements are anticipated over time.
