Happy October. I hope everyone is enjoying the cooler fall weather across the country. The midterm elections are just around the corner as we start off this last quarter of 2026. Once again, the S&P has had a solid run in the first three quarters, albeit with a few choppy periods this year, most notably in March, but as we know, intra-year pullbacks happen often, even in positive years. With that said, one thing that has been consistent this year is the rise of the 10-year Treasury yield. It has risen by about 100 basis points YTD as I write this.[1] Alongside this, 30-year mortgage rates have also been rising.
The 10-year Treasury yield is linked to mortgage rates, which sit at close to 7.4% as of the latest Primary Mortgage Market Survey® on 10/8/2026.[2] With inventory still tight and many homeowners locked in to lower mortgage rates and reluctant to sell, prices seem to remain sticky, making it difficult for first-time homebuyers and limiting mobility for existing homeowners due to the effect of both high prices and high rates. The higher rates are largely due to the Federal Reserve’s attempt to combat inflation as part of its dual mandate through monetary policy.
With these factors in mind, I would expect some of the political points to focus on how to make housing more affordable. There have been bipartisan initiatives to restrict large institutional investors from buying up all single-family home inventory.[3] But beyond political initiatives, the ultimate driver of affordability is still monetary policy. Going into the year, there was wide expectation of the Fed cutting rates. However, due to sticky inflation, those cuts haven’t come to fruition. Instead, the Fed actually raised rates last month. The market responds to lower borrowing costs, as do potential homebuyers. I think we will continue to see home affordability be an area of focus while mortgage rates, interest rates, and inflation all remain stubbornly high. At this point, we’ll move into the new year with a lot of the same eyes still on inflation since it has been one of the bigger economic catalysts since 2022. I hope everyone has a great start to the fourth quarter.
[1] https://fred.stlouisfed.org/series/dgs10
[2] https://www.freddiemac.com/pmms?gad_source=1&gad_campaignid=24292472302&gbraid=0AAAAA-zPkSrfxvYqyMYipfbkZEB9AxCDt&gclid=CjwKCAjwirLWBhBBEiwAlItbEmTaAYKBhufad0oytDns1L-HM4tYjjs4-T7mxXfuu8zcJSsoDox7ABoC3PEQAvD_BwE
[3] https://www.cbsnews.com/news/bipartisan-bill-aims-to-block-big-investors-from-buying-single-family-homes/
