Prospective homebuyers are navigating a housing market amid the highest borrowing costs in almost a year, squeezing budgets and limiting purchasing power, new government data show.
The average 30-year mortgage rate reached 6.58 percent for the week ending July 23, according to Freddie Mac’s Primary Mortgage Market Survey. This is firmly above the 52-week average of 6.32 percent and is inching closer to a one-year high.
Prior to the Iranian war’s start in late February, 30-year rates had fallen below 6 percent for the first time since late 2022.
The 15-year mortgage rate rose to 5.96 percent, its highest level since mid-June.
“The tug-of-war between inflation and the renewed conflict between the U.S. and Iran is reflected in today’s rates, as higher oil prices raise concerns that elevated energy costs could filter into future inflation readings,” Jeff DerGurahian, head economist and CIO at loanDepot, said in a statement to The Epoch Times.
Last month’s tranche of inflation data suggested pricing pressures were easing due to stabilizing global energy markets. However, an escalation in tensions in the Middle East has sent crude oil and gasoline prices higher again.
Brent—the international benchmark for oil prices—rose 8 percent and topped $100 per barrel in overseas markets. U.S. crude prices surged more than 7 percent to above $93 a barrel on the New York Mercantile Exchange. Gasoline prices have risen to above $4 per gallon in the past week.
Oil prices reacted to President Donald Trump threatening to impose a “major military punishment” against Iran and reports of attacks on tankers in the Red Sea.
‘Not the End of the World’
The spike in crude prices reignited inflation fears, which also lifted yields on U.S. Treasury securities.
The benchmark 10-year Treasury yield exceeded 4.7 percent for the first time since January 2025. The longer-dated 30-year Treasury bond also climbed above 5.17 percent.
The 2-year yield, which typically tracks Federal Reserve policy expectations, blew past 4.36 percent, signaling that investors anticipate further tightening by the U.S. central bank.
Mortgage rates tend to track movements in the U.S. bond market.
“Higher oil prices will likely show up in July’s headline inflation numbers, but the real question is whether they begin to bleed into core inflation,” DerGurahian said.
Core inflation strips out volatile energy and food categories. It has been tamer than the headline readings, easing to 2.6 percent in June and is poised to slow to 2.5 percent in the July Consumer Price Index report, suggests the Cleveland Fed’s Inflation Nowcasting model.
Fed Chairman Kevin Warsh and his colleagues have indicated that inflation is their top priority, a view further supported by stable labor market conditions.
Initial jobless claims—a measure of the number of individuals filing applications for unemployment benefits—fell to their lowest level since 1969 last week.
Investors widely expect the Fed will follow through on a quarter-point interest rate hike as early as September.
Looking ahead, mortgage rates might continue ticking up next week, according to Mortgage News Daily. As of July 23, the average fixed rate for a 30-year mortgage is 6.85 percent.
Despite elevated rates, it is “not the end of the world” for homebuyers, says Matthew Graham, COO at Mortgage News Daily.
“It is not ideal, but also not the end of the world. And if peace finds a way to break out again, June serves as a proof of concept that rates can respond favorably,” Graham said in a note.
Housing Market Conditions
Households are still exploring the U.S. real estate market amid economic uncertainty.
The volume of mortgage applications rose by almost 2 percent last week, with applications to purchase a new home increasing 6 percent, according to the Mortgage Bankers Association.
“Purchase volume increased modestly for the week. Growing home inventory in many markets is supporting more purchase activity,” Mike Fratantoni, the group’s chief economist and senior vice president, said in a July 22 news release.
At the same time, Redfin data show that housing affordability remains a sticking point as home prices rose 0.3 percent in June, “tied with May for the fastest growth since the start of 2026.” On a year-over-year basis, home prices jumped 3 percent.
Pending home sales tumbled more than 1 percent to a three-month low, and new listings edged up 0.4 percent.
