Mortgage Rates and Housing Market Update
Josh Altman, from Altman Brothers Real Estate, recently appeared on Varney & Company, where Governor Gavin Newsom spoke about his $11.2 billion bond plan aimed at increasing housing availability in California.
Freddie Mac reported that mortgage rates saw a minor increase this week but have been mostly stable in recent weeks. The average interest rate for a 30-year fixed mortgage rose to 6.49%, up from 6.43% last week. For context, the rate was 6.72% this time last year.
Improving Home Affordability Amid Slowing Price Growth
Sam Cater, Freddie Mac’s chief economist, mentioned that even though mortgage rates haven’t fluctuated much lately, there are ongoing improvements in economic growth and housing affordability for buyers in today’s market. The 15-year fixed mortgage rate also had a slight uptick to 5.82%, increasing from 5.79% last week, but still lower than the average of 5.86% a year ago.
Several factors influence mortgage rates, including the Federal Reserve and geopolitical events. While mortgage rates aren’t directly impacted by the Fed’s decisions, they are closely tied to the 10-year Treasury yield, which as of Thursday afternoon was around 4.5%.
Recent stats indicate that housing market conditions are somewhat improving for buyers, although many remain hesitant due to inventory shortages pushing up home prices and the steadiness of mortgage rates. Realtor.com released a mid-year update this week projecting that home price growth for 2026 will slow to 1.2%, which is less than initially expected and below current inflation rates. Essentially, this means house prices may effectively drop when adjusted for inflation.
Challenges Facing New Home Builders
Daniel Hale, a senior economist at Realtor.com, noted that despite facing various challenges, the economy has remained resilient. He remarked that the first half of 2026 has seen more stability than growth in the housing sector. Sellers are recalibrating their expectations, price growth is slowing, and buyers are finding themselves in a stronger negotiating position.
Looking ahead, Hale anticipates that the second half of the year might see an uptick in market activity as more buyers and sellers re-engage in finding mutually beneficial terms.
Finally, mortgage rates are projected to stabilize at around 6.3%, which is consistent with the level expected by the end of 2025. Initial hopes for rate cuts early in the year, which could have lowered mortgage rates, were dashed due to inflation spikes linked to international conflicts.
