Iran conflict lifts mortgage rates, but housing demand stays positive

Last week saw an escalation of the Iran conflict, with missile strikes and rising mortgage rates as a result, but housing demand still held firm and inventory was only down a smidge year over year. We should be mindful that our data was hit by the 4th of July weekend, but even with that, demand was still positive year over year. Also, be prepared for a rebound in the data next week and look at it in context.

Let’s dive into the tracker data for last week.

Weekly pending sales

Our pending home sales data provides a week-to-week perspective, though results can be affected by holidays and short-term fluctuations. This weekly pending sales data typically takes 30-60 days to be reflected in the sales data. 

We had the traditional July 4th weekend hit to the data, which happens every year, but even with that, demand was still positive year over year. Seasonality is kicking in on our weekly data line, but we always keep an eye out for year-over-year. 

Here are the pending sales for last week over the last two years:

• 2026: 63,971
• 2025: 61,143

Mortgage purchase application data

Purchase application data is traditionally a forward-looking data line that looks out 30-90 days. This year, outside of two weeks, purchase apps have shown positive year-over-year growth. Last week, we had a 1% week-to-week decline but 5% year-over-year growth. Post-COVID, I would like to see at least 12-14 weeks of positive week-to-week data alongside year-over-year growth data. So far, the week to week data has been flat while the year-over-year data has shown growth.

Here are the stats on purchase apps so far in 2026

• 11 positive week-to-week prints
• 13 negative week-to-week prints
• 2 flat week-to-week prints
• 10 weeks of double-digit year-over-year growth
• 24 weeks of positive year-over-year growth
• 2 negative year-over-year prints

Housing inventory

Over the past few weeks, housing inventory has gone negative year over year, which isn’t a shock to those who have been reading the Housing Market Tracker the last 12 months. Some people just naturally assumed inventory would have been back at 2019 levels this year, but demand has picked up a bit, slowing inventory growth a lot over the last 12 months. 

Some of our weekly data has been negative year-over-year, but only by a smidge. Last week, the National Association of Realtors reported its inventory data was down month-to-month. Remember that housing inventory is up from the lows we saw during Covid and are at much healthier levels than what we had from years 2020-2023. 

Housing inventory was impacted by the holiday weekend; look for a rebound in the data next week. 

• Weekly inventory change:(July 3-July 10): Inventory fell from to 852,241 to 844,011
• Same week last year: (July 4-July 11): Inventory fell from 853,160 to 846,843

New listings

Seasonality in the new listings data is here; we will see a slow decline toward the end of the year, then start right back up again next year.  Traditionally, there would be 80,000-100,000 new listings during the seasonal peak weeks, but we’ve only cracked above 80,000 four times this year and never in back-to-back weeks. Still, new listing data for 2025 and 2026 are better than in 2023 and 2024. This year, we just had a bit more demand than at the start of last year.

Some context for those who believe that the new listings data resembles the housing bubble years: new listings during that time ranged from 250,000 to 400,000 per week for several years.

Here is last week’s new listings data for the past two years:

• 2026: 63,405
• 2025:  60,726

Price-cut percentage

Typically, about one-third of homes undergo price reductions before they sell, reflecting the dynamic nature of the housing market. For the most part, price-cut percentages this year have been lower than last year. This is a by-product of inventory growth slowing down and, in some weeks, the data being negative year over year. 

In my 2026 home-price forecast, I had a negative 0.62% call for the year nationally. Home-price growth really isn’t going anywhere this year, but the percentage of price cuts has been lower year over year for most of 2026.  My forecast of negative -0.62% might be hard to achieve: even though home-price growth isn’t positive by much this year, it is still positive.

The price-cut percentage for last week:

• 2026: 39.57%
• 2025: 41%

10-year yield and mortgage rates

In the 2026 HousingWire forecast, I anticipated the following ranges:

• Mortgage rates between 5.75% and 6.75%
• The 10-year yield fluctuating between 3.80% and 4.60%

Last week was hectic as we had renewed action in the Iran conflict happen during market hours, and the bond market did not like missiles being fired and oil prices heading higher. In the end, oil never really broke out and the week ended under $72. However, the 10-year yield still closed close to my peak forecast. We did bounce off that 4.60% level, but it’s inflation week coming up, so we need to keep an eye on how the bond market reacts to the inflation data, as the market has already priced in a more hawkish Fed today. 

Mortgage spreads

The most positive housing story in 2026 has been mortgage spreads; with all the drama, they have done their job and have kept mortgage rates lower than the previous three years.

Historically, mortgage spreads have ranged from 1.60% to 1.80%. Last week, spreads were at 1.95%, down from 2.01% the week before.

Let’s compare last week’s mortgage rates to where they would have been over the last three years, given the 10-year yield’s current level:

• If we had the worst mortgage spread levels of 2023, mortgage rates would be 7.80% today, not 6.64%.
• If we had the worst levels of 2024, mortgage rates would be 7.42% today 
• If we had the worst levels of 2025, mortgage rates would be 7.23% today.

The week ahead: Inflation week, housing starts, pending home sales and Iran conflict?

It’s inflation week, and since the Fed has gotten hawkish, it will be very interesting to see how the bond market reacts to the inflation now that the 10-year yield is so close to my yearly peak forecast.

We will also get housing starts, builder confidence and pending home sales data from the NAR. I believe the last existing home sales report will be revised slightly higher as well. 

Also, lets see if we have another week of missiles being shot in Iran as the 10-year yield did react negatively to last week’s events.