I wanted to walk you through what's happening with mortgage rates right now, because there's some important context to understand. According to Realtor.com Research, the 30-year fixed mortgage rate dropped two basis points this week to 6.65%, which is pretty much where they expected it to land. But here's the thing to keep in mind: that Freddie Mac number is actually an average of rates from the whole week, so what we're seeing reported today doesn't fully capture the volatility that's been happening in the bond markets. The reality is that mortgage rates could very well move higher next week as we digest some of this turmoil.
What's creating that turbulence is a move in the 30-year Treasury to levels we haven't seen in nearly 20 years, which was significant enough that the Treasury Department itself had to step in and buy back billions in bonds. Now, you might hear a lot of noise about the 30-year and all the headlines that come with it, but what actually matters more for people like you trying to get a mortgage is the 10-year Treasury, which is what mortgage rates tend to follow. The 10-year did climb five basis points today to around 4.70%, but that's still pretty much in line with where it's been sitting for the past few weeks.
The Realtor.com analysts point out that this market movement isn't really about the Federal Reserve hiking rates, which the markets see as pretty unlikely anyway. Instead, it's about concerns over the country's fiscal health over the next several years. What that means is we're feeling more upward pressure on mortgage rates than downward, and that's happening right as we head into late summer and early fall, which is traditionally a good time for buyers to be shopping. Rates have climbed twelve basis points just over the past three months and are now seven basis points higher than they were a year ago.
The strain is already showing up in the housing data. According to Realtor.com, pending home sales declined in July both for the month and compared to last year as rates pushed higher throughout that month. Housing starts also fell noticeably, and builders now have the largest pile of permits they haven't started building on in over a year. We're seeing what's called a K-shaped market develop, where luxury properties are still moving but entry-level buyers are getting priced out of the competition.
It's worth remembering that mortgage rates have been averaging slightly better this year compared to last year, so we did have some advantage as we came through spring and early summer. But that cushion is definitely shrinking week by week. The combination of higher rates and all these market movements reminds me of what could have been if rates had stayed lower through this whole season.
What I'm seeing locally here in the Bay Area and throughout the East Bay is exactly this pressure playing out in real time. Those first-time and entry-level buyers who were hoping to catch a break are feeling squeezed, while the higher-end market keeps humming along. If rates continue climbing toward 7% and beyond, we're going to see even more separation between who can afford to buy and who gets pushed to the sidelines. This is a good reminder for anyone thinking about buying to lock in while they can, because the window for favorable financing feels like it's closing.
