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

By Samantha Delouya, CNN

(CNN) — Home shoppers hoping for a break in affordability as the spring homebuying season wraps up may be in for another letdown.

The war with Iran and the inflation spike that followed have kept mortgage rates stubbornly high, while fresh fears that the Federal Reserve could raise interest rates to contain price pressures have only added to the uncertainty. At the same time, a bipartisan housing bill, aimed at boosting supply and easing some of that affordability strain over the next few years, is set to automatically become law at midnight on Friday into Saturday, unless President Donald Trump vetoes it.

This week, the average 30-year fixed mortgage was 6.49%, according to Freddie Mac, hovering near the highest levels of the year.

Mortgage rates loosely track the US 10-year Treasury yield, which is closely tied to inflation expectations. The yield, which moves in the opposite direction to bond prices, has remained elevated as investors worry that higher oil prices and the Middle East conflict could lead to stubborn inflation and, eventually, interest rate hikes from the Fed.

A recent tentative deal between the US and Iran had somewhat calmed bond market fears but, this week, tensions flared up again, with the US carrying out additional strikes on Iran, sending oil prices – and the 10-year yield – higher.

Despite recent economic disruptions, Zillow still expects mortgage rates to drift lower, to about 6.3% by the end of 2026. That would still be higher than where rates landed at the end of 2025, though.

“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, said in a statement.

Home sales slowed in June

There are signs that mortgage rates stuck stubbornly above 6% are keeping some buyers on the sidelines.

Sales of existing homes fell by 2.4% in June compared to May, according to a report released Thursday by the National Association of Realtors, a setback during what is meant to be the housing market’s busy spring season. Still, compared to June of last year, sales increased by 2.8%.

“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.

But even with the decline in sales, the median existing home sales price continues to climb, hitting a record high for the month of June of $440,600, according to NAR.

Housing bill set to become law this week

Mortgage rates are just one part of the overall housing affordability picture.

A shortage of homes for sale has also long been an issue, driving prices higher as buyers compete for fewer homes. But last month, Congress passed a bill called the 21st Century Road to Housing Act, with the goal of adding more supply of homes to the market.

The bill aims to make it easier to add manufactured homes, or homes that are built off-site in factories. It also offers grants and forgivable loans to repair existing homes that have fallen into disrepair, among other provisions aimed at boosting market supply.

Last month, Trump abruptly decided to cancel the official signing of the bill that would have made it law. In a social media post, Trump said at the time that the bill was “of minor importance compared to lower interest rates” and later called it a “big yawn.”

However, if Trump does not veto the bill before Friday night, it will automatically become law. Experts say it won’t immediately improve home prices or availability in most areas of the country, though there may be improvements over time.

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