US Mortgage Rates Hit 7.5% as Homebuyer Demand Slows and Price Cuts Rise
United States | September 28, 2026: Mortgage rates approaching 7.5% are putting renewed pressure on the US housing market, with homebuyer demand weakening and more sellers cutting asking prices. Weekly pending home sales fell to 59,316, while the share of homes with price reductions climbed to 42.5%, highlighting the growing affordability challenge for buyers.
According to HousingWire analyst Logan Mohtashami, rising bond yields, geopolitical tensions and hawkish Federal Reserve statements contributed to the latest increase in mortgage rates. The shift is raising fresh questions about housing demand, home prices and the outlook for the remainder of 2026.
Mortgage Rates Climb to 7.49% Amid Bond Market Volatility
Mortgage rates rose to 7.49% during the week before easing to 7.43%, according to HousingWire's September 27 report. The increase followed significant volatility in the bond market, driven by geopolitical developments, oil prices and Federal Reserve commentary.
The 10-year Treasury yield has become an important indicator for mortgage rates. Mohtashami highlighted 5.40% as a key yield level to watch, noting that a further increase could put mortgage rates under additional pressure.
His analysis also identified the possibility of rates approaching 8% if geopolitical tensions worsen and bond yields rise further. This remains a scenario rather than a confirmed forecast.
Pending Home Sales Fall as Buyers Face Higher Borrowing Costs
The increase in mortgage rates is already reflected in weekly housing demand data. Pending home sales fell to 59,316 for the week ending September 25, compared with 65,152 during the corresponding period in 2025.
The decline represents a year-over-year drop of nearly 9%. HousingWire noted that mortgage rates above 7%, combined with unusually high volatility, created additional pressure on demand.
For prospective buyers, higher borrowing costs can reduce purchasing power and increase monthly mortgage payments. Some households may delay purchases or look for lower-priced properties as financing becomes more expensive.
Price Cuts Reach 42.5% as Sellers Adjust Asking Prices
More sellers are reducing asking prices as buyers become more sensitive to affordability. The share of homes with price cuts reached 42.5% in the latest weekly data, compared with 41.5% during the same period in 2025.
The increase suggests that sellers are facing greater pressure to align their asking prices with what buyers can afford.
For buyers, price reductions may create opportunities to negotiate. However, the figures do not mean that every property is becoming cheaper, as pricing conditions can vary significantly by location and property type.
Housing Inventory Rises to Nearly 895,400 Homes
US housing inventory increased from 890,303 to 895,398 between September 18 and September 25, 2026.
Although inventory rose during the week, HousingWire described overall inventory growth in 2026 as relatively modest. Higher mortgage rates can reduce buyer demand, allowing available homes to remain on the market longer.
The increase in listings may give buyers more properties to consider, but the pace of inventory growth remains an important factor in determining whether local markets experience stronger negotiating conditions.
Mortgage Applications Show Signs of Weakness
Mortgage purchase applications declined 1% week over week and were down 11% compared with the same period last year.
The figures indicate that higher borrowing costs are affecting buyers' willingness or ability to proceed with home purchases. Purchase application data also provides an early indication of potential sales activity over the following 30 to 90 days.
If application activity remains weak, the slowdown could continue to affect home sales in the coming months. However, future demand will also depend on mortgage rates, employment conditions and the availability of homes at affordable prices.
Mortgage Spreads Remain an Important Factor
Mortgage spreads, which measure the difference between mortgage rates and comparable Treasury yields, are another key factor influencing borrowing costs.
According to Mohtashami, mortgage spreads stood at 1.98% in the latest week, slightly above the previous week's 1.97%. Historically, spreads have generally ranged between 1.60% and 1.80%.
The analyst noted that relatively stable spreads have helped keep mortgage rates below levels that would otherwise have been reached during periods of higher bond yields. A renewed widening in spreads could add further pressure to mortgage rates, while improvement could help moderate borrowing costs.
What Buyers and Sellers Should Watch Next
The coming weeks could bring further volatility as markets respond to employment data, inflation reports, home-price indexes and Federal Reserve commentary. Developments in the conflict involving Iran may also influence oil prices and bond yields.
For buyers, the latest figures underline the importance of evaluating monthly payments and financing costs rather than relying solely on asking prices. Sellers may need to pay closer attention to comparable listings and buyer demand when setting prices.
The direction of mortgage rates, changes in inventory and the pace of price reductions will be important indicators of how the US housing market develops through the final months of 2026.