Mortgage rates in the mid-6% range

In short: Mortgage rates are fluctuating in the mid-6% range, after falling below 6% weeks prior. The bulk of home activity typically happens between March and October, such that the longer the oil shock’s drag on housing, the smaller the window for catch-up activity before shoppers delay until next season.

Markets speculate on the longevity of the oil shock

Mortgage rates have been moving around the mid-6% range as markets try to gauge how long recent increases in energy prices might last. While geopolitical uncertainty and oil prices may continue to influence rates in the near term, upcoming economic data will also play a role. 

The March Bureau of Labor Statistics (BLS) employment report, set for release on April 3, will offer a clearer picture of the job market and help signal where the Federal Reserve may lean next. The previous report showed a loss in jobs alongside an uptick in unemployment, raising questions about whether the labor market is starting to soften.

If the labor market holds steady, an oil-driven increase in inflation could push policymakers to keep rates higher for longer. But if hiring weakens more noticeably, even in the face of higher energy costs, the Fed may place greater weight on supporting economic growth, which could ease pressure on rates.

What’s the impact on housing? 

Higher mortgage rates have undone about a third of this year’s affordability gains. As Zillow’s chief economist noted, the impact on the housing market depends on how long the rate shock lasts. If the situation resolves quickly, it’ll be early enough in the home shopping season for catch-up activity, and transactions might be higher than our modeled scenarios. The longer it takes for the rate shock to resolve, the more likely transactions would be delayed to next season, offering a repeat of 2025.

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