Last week, as the Iran conflict pushed 10-year Treasury yields to 4.48% and mortgage rates hit 6.64%, something counterintuitive happened: housing demand still showed year-over-year growth. In a year already marked by AI labor disruption headlines, epic snowstorms, and geopolitical tensions, the U.S. housing market demonstrated remarkable resilience—but the data reveals cracks in the armor.

Context & Background

The U.S. housing market has operated under a delicate equilibrium since 2022, where the 6.64% rate has served as a psychological dividing line. Every time rates fell below this threshold and headed toward 6%, demand consistently improved, as seen in late 2022 to early 2023, mid-2024, and mid-2025. The inverse pattern holds equally true: when mortgage rates climb above 6.64% and approach 7%, demand turns negative. Now, with the Iran conflict adding upward pressure to rates and the Federal Reserve monitoring inflation, the market faces its stiffest test since the pandemic.

“"6.64% isn't just a number—it's the inflection point where buyer psychology shifts from 'opportunity' to 'wait-and-see.'"”

Analysis & Impact

The pending home sales data shows the last six weeks have registered positive yearly growth, with 70,209 transactions last week compared to 69,183 during the same period in 2025. However, this yearly growth slowed last week, and week-to-week data dipped, suggesting momentum is fading. More concerning is the slowdown in mortgage purchase applications, a forward-looking indicator that leads home sales by 30-90 days. While 2026 has shown positive year-over-year growth every single week, weekly growth slowed from 12% to 5% last week, with a 5% week-to-week decline.