Mortgage rates remained below 7% this week despite rising Treasury yields, thanks to improved mortgage spreads that narrowed to 1.94% as of July 25, 2026. Last week, spreads were at 1.94%, down from 1.97% the week before. On Sunday, July 26, 2026, the current average interest rate for a 30-year fixed mortgage is 6.75%. Meanwhile, the unadjusted purchase index increased 6% compared with the previous week and was 0.2% higher than the same week one year ago, and pending home sales in June decreased by 5.4% month-over-month and 0.3% year-over-year.
The data signals that housing demand remains cautiously positive despite elevated borrowing costs, with buyers continuing to enter the market even as affordability challenges persist. For prospective homebuyers, the combination of rates staying under 7% and stable year-over-year purchase activity suggests the market is holding up better than many expected, though rising rates in recent weeks have begun to slow momentum.
Understanding what’s driving these trends—and what they mean for your homebuying timeline—is critical as the summer selling season continues.
The numbers
Mortgage spreads keep rates in check
The gap between mortgage rates and Treasury yields has compressed significantly compared to recent years
The main reason housing demand has stayed firm in 2026 is that mortgage spreads alone have kept mortgage rates below 6.64% most of the year. Mortgage spreads—the difference between the 30-year fixed mortgage rate and the 10-year Treasury yield—have historically ranged from 1.60% to 1.80%. Historically, mortgage spreads have ranged from 1.60% to 1.80%. Last week, spreads were at 1.94%, down from 1.97% the week before.
This improvement has been crucial for keeping rates manageable. If we had the worst mortgage spread levels of 2023, mortgage rates would be 7.98% today, not 6.81%. If we had the worst levels of 2024, mortgage rates would be 7.60% today. If we had the worst levels of 2025, mortgage rates would be 7.41% today. The tighter spreads reflect improving conditions in the secondary mortgage market and more stable investor demand for mortgage-backed securities.
Freddie Mac’s average rate for a 30-year, fixed-rate loan inched up to 6.58% for the week ending July 23. By the weekend, the average interest rate on a 30-year fixed-rate mortgage rose eight basis points to 6.73% APR, reflecting the impact of rising Treasury yields driven by increased tension in the Middle East and concerns over rising inflation. Oil prices have climbed above $90 per barrel, raising inflation concerns and pushing bond yields higher.
Key rate benchmarks
6.75%: Average 30-year fixed mortgage rate as of July 26, 2026
1.94%: Current mortgage spread over 10-year Treasury (down from 1.97% prior week)
6.58%: Freddie Mac’s weekly average for the week ending July 23
6.64%: The threshold below which housing demand typically strengthens
Market activity
Purchase applications edge higher year-over-year
Buyer demand shows resilience with modest annual growth despite weekly volatility
Mortgage purchase applications have shown surprising resilience in 2026. The unadjusted purchase index was 0.2% higher than the same week one year ago for the week ending July 17, according to the Mortgage Bankers Association’s weekly survey. This marks a continuation of positive year-over-year comparisons that have persisted for much of 2026.
Purchase applications remain ahead of 2025’s pace and have exhibited year-over-year growth for almost three months, as prospective homebuyers are finding opportunities in markets with ample inventory and easing home-price growth. However, the growth has slowed considerably. Earlier in June, purchase applications remained 5% higher than the same week one year ago, but by mid-July that gain had narrowed to just 0.2%.
Week-to-week activity has been more volatile. The seasonally adjusted Purchase Index rose 5.5% compared to the week before for the week ending July 17, rebounding after a decline the previous week. Typically, in the past few years, when mortgage rates get above 6.64% and then break over 7%, housing demand slows. With rates now hovering in the mid-to-high 6% range, buyers are becoming increasingly sensitive to further rate increases.
For prospective buyers, this data suggests competition remains steady but not overwhelming. The modest year-over-year growth indicates you’re not facing the bidding wars of 2021-2022, but you’ll still encounter other buyers in desirable markets. If you’re ready to buy and can afford current rates, waiting for lower rates may mean facing more competition when rates do eventually fall. Learn more about mortgage options and how to secure the best rate for your situation.
Pending sales
Contract signings show mixed signals
National pending sales dipped in June while some markets saw gains
Pending home sales—properties under contract but not yet closed—present a more nuanced picture. Pending home sales in June decreased by 5.4% month-over-month and 0.3% year-over-year, according to the National Association of REALTORS® Pending Home Sales report. The National Association of Realtors’ official Pending Home Sales Index showed weakness across most regions.
Month-over-month pending home sales declined in all four major U.S. regions. Year-over-year pending home sales increased in the Northeast and Midwest but declined in the South and West. “The highest mortgage rates in nearly a year and the record-high national median home price together are contributing to a tepid housing market that is especially difficult for first-time homebuyers,” said NAR Chief Economist Dr. Lawrence Yun.
The near-flat year-over-year figure (down just 0.3%) masks significant regional variation. Some metro areas posted strong gains: St. Louis, MO-IL posted a 9.1% annual increase in pending home sales, ranking among the top 10 markets. Meanwhile, more recent weekly data from Redfin showed pending sales in the United States dropped by 2.2% in the four-week period ending July 12, marking the first decline in a month.
Realtor.com data painted a somewhat brighter picture for the full month of June, with pending sales rising 3.7% year over year for the seventh straight month of growth. The conflicting data points reflect different methodologies and time periods, but the overall message is clear: pending sales growth has slowed significantly as rates have climbed back toward 7%.
What pending sales tell us
Pending sales are a leading indicator of closed home sales 30-60 days out. The June data suggests July and August closings may be softer than earlier in the year. “It is worth emphasizing that it is closing activity, not contract signings, that generates economic impact.” Regional differences matter: if you’re buying in the Northeast or Midwest, you may face slightly more competition than in the South or West.
What it means
How buyers should respond to current conditions
Stable demand and rates below 7% create opportunities despite affordability challenges
The combination of mortgage rates holding below 7%, modestly positive purchase application growth, and near-flat pending sales creates a unique environment for homebuyers in mid-2026. Most of the year has been below 6.64%, housing demand has held firm. But as rates have climbed toward 7% in recent weeks, that firmness is being tested.
The Federal Reserve has held rates steady at 3.50% to 3.75% throughout 2026 so far, holding off on additional cuts while evaluating new economic data. With inflation concerns resurfacing due to higher oil prices and geopolitical tensions, rate cuts appear unlikely in the near term. The Federal Reserve declined to cut rates at its most recent meeting and many economists have since shifted their expectations more toward hikes as inflation remains high.
For buyers, this means the current rate environment—mid-to-high 6% range—is likely to persist for the remainder of 2026. Waiting for rates to drop significantly below 6% may be unrealistic in the short term. At the same time, the modest purchase application growth suggests you won’t face the intense competition that emerges when rates fall sharply. If you’re a first-time homebuyer, explore all available assistance programs and zero-down payment options to improve affordability.
The slight year-over-year decline in pending sales (down 0.3%) combined with the modest increase in purchase applications (up 0.2%) suggests the market is in a holding pattern. The median sale price rose 2.2% year over year to $408,808, just about $500 shy of the all-time high. Prices remain stubbornly high, limiting how much the relatively stable rate environment can help affordability. Understanding your budget and what you can truly afford is more important than ever.
If you’re ready to buy—with stable income, adequate savings, and a plan to stay in the home for at least five years—current conditions are workable. Rates below 7% are significantly better than the worst-case scenarios that would exist without improved mortgage spreads, and buyer competition remains manageable. The key is to shop aggressively for the best rate, as one additional rate quote saves borrowers about $600 over the loan’s life, up to $1,200 with three.
Quick answers
Mortgage rates and home sales: common questions
Why are mortgage rates staying below 7% despite rising Treasury yields?
Improved mortgage spreads—the gap between mortgage rates and Treasury yields—have compressed to 1.94%, down from over 3% at the worst points in 2023. This improvement reflects better conditions in the secondary mortgage market and more stable investor demand for mortgage-backed securities. Without this spread compression, rates would be closer to 8% given current Treasury yield levels.
Are purchase applications really up if pending sales are down?
Yes, but they measure different things at different times. Purchase applications (up 0.2% year-over-year for the week of July 17) measure mortgage application activity, while pending sales (down 0.3% year-over-year in June) measure signed purchase contracts. The small differences reflect timing, regional variation, and the fact that not all applications result in contracts. Both indicators show demand is essentially flat compared to a year ago, with slight variations week to week.
What mortgage rate should I expect if I apply today?
As of July 26, 2026, the average 30-year fixed mortgage rate is around 6.75%, though your actual rate will depend on your credit score, down payment, loan type, and lender. Rates have ranged from the mid-6% to low-7% range in recent weeks. Borrowers with excellent credit (740+) and 20% down payments can typically secure rates at or below the averages, while those with lower credit scores or smaller down payments will pay more.
Should I wait for rates to drop before buying?
With the Federal Reserve holding rates steady and inflation concerns resurfacing, significant rate drops appear unlikely in the near term. Experts forecast rates will remain in the 6.3% to 6.6% range for the rest of 2026. If rates do drop, buyer competition will likely increase, potentially driving up home prices. If you’re financially ready and plan to stay in the home long-term, buying at current rates with the option to refinance later may make more sense than waiting.
How do current rates compare historically?
Current rates in the mid-to-high 6% range are elevated compared to the 2020-2021 period when rates averaged 2.65% to 3%, but they’re not extreme by longer historical standards. From 1990 to 2020, 30-year mortgage rates averaged around 6% to 7%. The ultra-low rates of the pandemic era were historically unusual and unlikely to return soon. Today’s rates are challenging primarily because home prices have also surged, creating a double affordability squeeze.
Which regions are seeing the strongest buyer demand?
Year-over-year pending sales increased in the Northeast and Midwest in June but declined in the South and West. Among the top 50 metro areas, St. Louis posted a 9.1% annual increase in pending sales. Markets with ample inventory and slower price growth are seeing more activity, as buyers find better opportunities compared to high-cost coastal markets where affordability remains severely constrained.