Market Update - August 7, 2026

Friday, August 7, 2026

This Market Update is written by our Capital Market specialists each week to bring you insight into what's happening in the market and how it may affect mortgage rates and real estate trends.

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Rates are provided by Mortgage News Daily. The MND Rate Index is the best way to follow day-to-day movement in mortgage rates. The index is driven by real-time changes in actual lender rate sheets. This has two huge advantages, timeliness and accuracy. A "top tier" scenario is used as a baseline (75 LTV, 780 FICO, etc.). We use proprietary methodology to adjust the rate to account for points. ***That can mean that lenders are quoting 6.125 with points while our index is at 6.25, hypothetically.***

Market Commentary:

U.S. mortgage rates hovered near one-year highs between July 31 and August 6, 2026, with the 30-year fixed average stabilizing around 6.65% to 6.78%. Markets digested the Federal Reserve's decision to hold the federal funds rate steady at 3.50% to 3.75%; alongside lingering energy price pressures tied to the conflict in Iran.

Market Drivers:

Fed Inaction & Hawkish Tone: The Fed's steady rate choice failed to pacify bond markets; cautious commentary left yields elevated.
Treasury Yield Fluctuations: 10-year Treasury yields moved around 4.61% to 4.67%, maintaining a tight ceiling on mortgage pricing relief.
Energy Costs: Oil price volatility kept broader inflation expectations high, directly translating to sticky borrowing costs.

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Actionable Takeaways:

Inventory as Leverage: Rising inventory is helping balance buyer hesitation, giving active clients more negotiating power despite mid-6% to high-6% rates.
Affordability Conversations: Emphasize realistic monthly payments based on current averages (approx. $646 per $100k borrowed on a 30-year fixed) rather than historical lows.
Optimism on the Horizon: Early August saw slight downward ticks due to easing oil momentum and discussions around reopening shipping lanes.

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Mortgage rate predictions through 2030: Where are they headed?

A chart titled “A Quick Look Back,” summarizing key U.S. economic events from July 31 to August 6, 2026. The table includes Event Date, Event Name, Actual Data, Forecast, Previous Data, and Commentary. On July 31, the U.S. Employment Cost Index increased 0.9% during the second quarter, slightly above the forecast of 0.8% and matching the previous quarter’s 0.9% rise. Total compensation costs for civilian workers increased 3.4% over the 12 months ending in June 2026, indicating that wage and benefit growth remained steady. Also on July 31, the final University of Michigan Consumer Sentiment Index for July rose to 55.2, exceeding the forecast of 54.0 and improving substantially from June’s 49.5. The increase represented a broad-based 12% improvement across demographic groups, although overall sentiment remained 11% below its level one year earlier as consumers continued to express concerns about the cost of living. On August 3, the ISM Manufacturing PMI climbed to 55.6 in July, surpassing the forecast of 54.0 and rising from June’s 53.3. The reading marked the highest level since May 2022 and the seventh consecutive month of expansion in the manufacturing sector. On August 5, the ISM Non-Manufacturing, or Services, PMI edged up to 54.1 from 54.0 in June, although it came in slightly below the forecast of 54.5. The reading remained above the 50-point threshold, signaling continued expansion in the services sector. On August 6, Initial Jobless Claims for the week ending August 1 rose slightly to 199,000 from the previous week’s 197,000 but remained below the forecast of 202,000. The relatively low level of new unemployment claims continued to indicate limited layoffs and resilience in the U.S. labor market. Overall, the week’s data showed steady employment costs, improving consumer sentiment, continued expansion in both manufacturing and services, and a labor market that remained strong despite a modest increase in weekly jobless claims.

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FedWatch: Target rate (in bps) possibilities, according to the CMEGroup (as of 08/06/2026– 12:00 PM EST):

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NAHB: Regulations account for about 1 in every 4 dollars spent to build a new home

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Affordability is a ‘defining challenge’ for Americans, with food costs leading the way, report finds

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U.S. Economy Expanded at a Slower Pace in the Second Quarter of 2026

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Unemployment rates down in 27 large metro areas, up in 26, over year ended June 2026

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Policy Perversity

While the Chinese yuan is indeed undervalued, it’s not the key to reversing China’s immense trade surpluses, it’s primarily an outcome. China suppresses household consumption and is experiencing collapsing residential property values. That combination creates weak currency. The US runs large budget deficits and has insufficient savings, ergo big trade deficits. Both nations have a bad policy mix. The US needs to save more, China needs to increase domestic spending. - Elliot Eisenberg, Economist

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News You Can Use:

· Fed Governor Cook says she's 'prepared to act' on rate hike to address inflation

· Grocery prices are Americans' top affordability challenge: Report

· Fannie and Freddie's New Condo Mortgage Rules May Mean More Denials

· Home Prices Increased in 80% of Metro Areas in Second Quarter of 2026

· Residential Construction Spending Slips as Remodeling Activity Weakens – Eye On Housing

· Mortgage Rates Are Around Year-Ago Levels - Zillow Research

· Slower U.S. Summer Housing Market Gives Buyers the Upper Hand

· Foreign Buyers Purchased $45.3 Billion Worth of U.S. Homes from April ‘25 to March ‘26

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*Communication is intended for Industry Professionals only and not intended for Consumer Distribution

Interest rate and annual percentage rate (APR) are based on current market conditions as of 08/06/2026, are for informational purposes only, are subject to change without notice and may be subject to pricing add-ons related to property type, loan amount, loan-to-value, credit score and other variables. Estimated closing costs used in the APR calculation are assumed to be paid by the borrower at closing. If the closing costs are financed, the loan, APR and payment amounts will be higher. Contact us for details. Additional loan programs may be available. Accuracy is not guaranteed, and all products may not be available in all borrower's geographical areas and are based on their individual situation. This is not a credit decision or a commitment to lend. Actual interest rate, APR, and payment may vary based on the specific terms of the loan selected, verification of information, your credit history, the location and type of property, and other factors as determined by Prosperity Home Mortgage, LLC. Not available in all states. Rate is as of 08/06/2026 and is subject to change at any time without notice. Opinions, estimates, forecasts, and other views contained in this document are those of Freddie Mac’s economists and other researchers, do not necessarily represent the views of Freddie Mac or its management, and should not be construed as indicating Freddie Mac’s business prospects or expected results. Although the authors attempt to provide reliable, useful information, they do not guarantee that the information or other content in this document is accurate, current, or suitable for any particular purpose. All content is subject to change without notice. All content is provided on an “as is” basis, with no warranties of any kind whatsoever. Information from this document may be used with proper attribution.

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Friday, August 7, 2026