Mortgage rates are stuck near 6.5%. A new housing law may make buying easier – eventually

Homebuyers Face Continued Challenges as Mortgage Rates Hold Steady Near 6.5%

Mortgage rates are stuck near 6 5 – As the spring homebuying season draws to a close, prospective homeowners seeking relief from affordability pressures may encounter further disappointment. Persistent tensions with Iran, coupled with an inflation surge that followed, have maintained mortgage rates at elevated levels. Additionally, growing concerns that the Federal Reserve might increase interest rates to manage price pressures have intensified market uncertainty. Meanwhile, a bipartisan housing legislation designed to increase supply and alleviate some affordability constraints over the coming years is poised to automatically become law at midnight transitioning from Friday to Saturday, barring a presidential veto from Donald Trump.

Mortgage Rates and Treasury Yields Remain Elevated

This week, the average 30-year fixed mortgage rate stood at 6.49%, according to Freddie Mac data, positioning rates near their highest point of the year. Mortgage rates generally follow the trajectory of the US 10-year Treasury yield, which maintains a strong correlation with inflation expectations. The yield, which moves inversely to bond prices, has stayed elevated as investors express concern that rising oil prices and ongoing Middle East conflicts could produce persistent inflation and ultimately trigger 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, pushing both oil prices and the 10-year yield upward. Despite these recent economic disruptions, Zillow projects that mortgage rates will gradually decline to approximately 6.3% by the conclusion of 2026. This projection remains above the rate levels observed at the end of 2025.

“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,” Kara Ng, a senior Zillow economist, explained in a statement.

Housing Legislation Aims to Boost Supply

Indications suggest that mortgage rates persisting above 6% are discouraging certain buyers from entering the market. According to a report published Thursday by the National Association of Realtors, existing home sales decreased by 2.4% in June compared to May, representing a setback during what typically constitutes the housing market’s most active spring period. Nevertheless, when compared to June of the previous year, sales showed a 2.8% increase.

“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,” said NAR chief economist Lawrence Yun in a statement.

Even with the recent sales decline, the median existing home sales price continues its upward trajectory, reaching a record high for June at $440,600 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 similarly contributed to rising prices as buyers compete for limited inventory.

Last month, Congress approved the 21st Century Road to Housing Act, legislation intended to increase housing supply in the marketplace. The bill seeks to facilitate the addition of manufactured homes, which are constructed off-site in factory settings. It also provides grants and forgivable loans to repair existing homes that have deteriorated, alongside other provisions designed to enhance market supply.

Trump’s Position and Future Outlook

Last month, Trump unexpectedly chose to cancel the formal signing ceremony for the bill that would have enacted it into law. In a social media message, Trump stated at that time that the legislation was “of minor importance compared to lower interest rates” and subsequently referred to it as a “big yawn.” However, should Trump refrain from vetoing the bill before Friday night, it will automatically become law.

Industry experts indicate that the legislation will not immediately improve home prices or availability across most regions of the country, though incremental improvements may emerge over time. The combination of elevated mortgage rates, geopolitical tensions, and housing supply constraints continues to shape the residential real estate landscape as buyers navigate an increasingly complex market environment.