Mortgage Rates Rise to 6.5% Amid Iran Conflict, Impacting U.S. Housing Market

The average rate for a 30-year fixed mortgage has increased from 5.99% to 6.5% following recent military conflicts with Iran. The Mortgage Bankers Association reported a 5% decline in mortgage applications for home purchases week-over-week. Zillow had initially projected a 4.3% increase in existing home sales for 2026, but this has been revised down with predictions of a potential decline of 0.73% if high rates persist and unemployment rises. KB Home has lowered its full-year forecast due to challenges, including reduced net orders and increased home supply. This situation creates uncertainty and may hinder the anticipated recovery in the housing market.