Rates Rise, Making the Mortgage Math Harder

In short: Mortgage rates have drifted from 6% in the spring to the upper end of their multi-year range this fall. For shoppers who didn't find a home during peak season, the math has gotten more challenging.

Mortgage rates rose as firm jobs and oil prices complicated the outlook

The mortgage math got harder for prospective buyers who didn’t find their home during peak shopping season. While the 30-year fixed mortgage rate has been largely range-bound between 6%-7% in the last couple of years, an unfortunate confluence of forces has pushed rates from 6% in spring to the upper end of that range as we head into fall.  

Geopolitical escalations pushed up oil prices once again. At the same time, the August jobs report showed the US added 162,000 jobs — more than three times expectations — while July's reported job loss was revised into a slight gain. That means taming inflation still remains a concern for the Fed, and the firmer employment picture removes an excuse to delay tightening. The August CPI report, expected on September 11, may inform the Fed’s urgency for its upcoming meeting on September 16.  

What’s the impact on housing? 

For the first half of 2026, home shoppers had better buying power than a year ago. That advantage ended in August. The mortgage payment on a typical home is 2% higher than a year ago, according to our latest Market Report. Incomes are rising faster than home values, which has kept affordability (measured as the share of income spent on mortgage, taxes, insurance, and maintenance) marginally better than a year ago. For many households, gains in housing affordability are quickly offset by living expenses– with CPI inflation rising faster than wages, there’s little breathing room left in budgets. 

Zillow has revised our end-2026 forecast upward to 6.7%. Given rates ended 2025 in the low-6% range, sales will be challenged.