05/23/2026
Rates Took a Hit This Week - But Local Housing Is Still Improving
Continuing from end of last week, rates were significantly impacted earlier in the week, and I’ll include the MBS coupon graph below so you can visually see how sharp the move was.
The main driver continues to be a combination of higher oil prices, inflation concerns, and pressure in the bond market. When markets worry that energy costs could keep inflation elevated, mortgage bonds usually take the hit - and that puts upward pressure on mortgage rates.
Earlier in the week, oil was still trading above $100 per barrel, the 10-year Treasury pushed through key technical levels, and mortgage bonds sold off sharply. That is why pricing felt noticeably worse for buyers.
The good news is that by the end of the week, we started to see some modest improvement as oil prices and yields pulled back on renewed optimism that the U.S. and Iran may be moving closer to some type of interim deal to reopen the Strait of Hormuz and improve oil flow.
That does not mean volatility is over - but it does show how quickly mortgage rates can react when geopolitical headlines shift.
What’s Happening Locally
Despite rate pressures, April housing data reveals strong buyer activity across California. In the Bay Area, median home prices remained relatively stable (San Francisco at $1.4M, Santa Clara at $2.1M, San Mateo at $2.3M), while sales surged significantly month-over-month and showed modest year-over-year growth. Southern California saw similar momentum, with the median price at $900,000 and sales up 8% from March, though year-over-year gains were minimal. Key markets like San Diego and Orange County posted stronger price appreciation (up 5.8% and 3.7% respectively), while Los Angeles County prices dipped slightly despite increased sales activity.
Why This Matters for Buyers
This is not a market where buyers should casually wait and hope everything gets easier.
Rates can move quickly, and when they do, buying power changes quickly. A buyer who was comfortable at one payment earlier in the week may need to revisit their approval, purchase price, or offer strategy if rates move again.
At the same time, I am seeing something important with my own clients: buyers who are prepared are still finding real opportunities. There is definitely less competition in certain situations, and I am seeing offers get accepted below where we may have expected just a short time ago.
The challenge is that there is no way to know how long this buyer-friendly window will last. If rates improve, more buyers could come back into the market quickly. If inventory tightens or competition picks up again, today’s negotiating opportunities may not be there.
That is why serious buyers should take advantage now while there may still be room to negotiate. This is the perfect market for move-up buyers.
For serious buyers, this is a good time to:
· Re-check payment comfort at current rates
· Understand how rate movement affects purchase price
· Look at seller credit strategies
· Review ARM options if the buyer has the right profile
· Stay ready when the right home and terms line up
The Fed and Rates
New Fed Chair Kevin Warsh is being sworn in this week, and markets will be watching his comments closely.
Right now, the bond market wants to see the Fed take inflation seriously. It may sound counterintuitive, but if Warsh takes a firm stance on inflation, that could actually help mortgage bonds because it may give investors more confidence that inflation will not be allowed to get out of control.
On the other hand, if oil prices rise again or the Iran situation escalates, we could see more pressure on rates.
This week is a good reminder that rate movement can happen fast.
For buyers, the best strategy is not to wait and hope. The better strategy is to understand the numbers, stay fully prepared, and move when the right opportunity shows up.
For realtors, this is a great week to reconnect with active buyers who may be watching from the sidelines. Some may need updated payment numbers. Others may need help understanding how seller credits, buydowns, or ARM options could make a purchase work.
If you have a buyer who is nervous about rates or unsure whether they should keep looking, send them over. I can walk them through the numbers and help them understand their options before they get too far into the process.
And if you have a tough scenario, send it over - I can help you position it to win.
Win of the Week
Move-up buyers, stretching their budget to move to a dream location. Over time, they increased their target price, but clients were prepared with Home Buyer Financial Planning sessions to assure them they can make the transition work.
By planning ahead, pulling equity out of their current home, and having multiple loan options with different income and asset qualification requirements won the deal.
It is a short term solution, allowing the clients to buy first and sell later, perfectly timed to take advantage of the market situation.
Ultimately, they scored a great deal in a prestigious neighborhood regularly selling for more than $5M, in contract to buy at $4.8M with just $570K of their own funds for down payment.
Let’s talk how you make most of current market situations.
About the graph (Red candle from last Friday to Tuesday shows how much mortgage bonds got worse, then the subsequent rebound from Wednesday – see how big and sudden the movements are)
