The housing market defies expectations even with higher rates

Housing demand still showed positive year-over-year growth last week, despite the hawkish Fed, escalation of the Iran conflict, rising mortgage rates and the 10-year yield hitting yearly highs. We had year-over-year growth in our weekly pending sales, total pending sales and purchase apps. Growth has slowed down over the past few weeks as mortgage rates have gotten above my key level of 6.64%. The longer we stay above 6.64%, the softer housing demand gets. This has typically been the case over the past few years.However, for now, considering everything that has happened since the Iran conflict 2.0 has surged and the Fed has gotten very hawkish, housing is doing ok. Of course, mortgage spreads being better in 2026 is the housing hero story of the year, but there is another variable as well. Mortgage spreads To make this as simple as possible, if mortgage spreads hadn’t improved as they typically do at this stage of the cycle, the housing data would look very different this year.The only reason mortgage rates got near 6% in 2023, 2024, 2025 and 2026 was that an economic/labor growth scare pushed the 10-year yield below 4%. This was never due to Fed policy, but the bond market attempt...