Mortgage Rates in 2026: Oil Broke, Inflation Didn’t, and the Fed Isn’t Cutting

Updated July 2026

By Ray Stendall | Published July 1, 2026 | Data verified through July 1, 2026

Mortgage rates are holding in the mid-6% range in 2026, with the average 30-year loan at 6.49% as of June 25 per Freddie Mac and the Federal Reserve signaling a hike is now likelier than a cut. Ray Stendall of Stendall Realty Group reads the data plainly: no rate relief this year, and a United States housing market splitting into three very different markets rather than crashing.

In May we published “The Three U.S. Housing Markets.” The whole argument ran on one chain of cause and effect. The Iran war keeps the Strait of Hormuz closed, which keeps oil expensive, which keeps inflation high, which keeps the Federal Reserve from cutting rates, which keeps mortgage rates stuck. Watch oil, we said, because oil was the one variable driving everything else.

Over the past month oil did exactly what we told you to watch for. It fell, and it fell hard. Almost nothing else followed.

That’s the whole story, and it matters more than anything we wrote in May. The moment most people are waiting for was supposed to be simple. The war ends, prices come down, the Fed cuts, mortgages drop. Well, the war calmed down and the relief still didn’t come. When the main trigger got pulled, nothing behind it moved.

The short version

• A United States-Iran peace agreement was signed June 17, and the Strait of Hormuz reopened. That strait carries about a fifth of the world’s oil. The truce wobbled in late June, with a brief exchange of strikes before both sides halted again and went back to talks. Through all of it, oil (Brent crude) fell to around $73 a barrel, down from $108 in May and off roughly 30% for the quarter.
• It barely dented inflation, and the Fed’s own preferred gauge proved it. Consumer prices rose 4.2% over the past year in May. The core measure the Federal Reserve watches most closely, the one that strips out food and energy, climbed to 3.4%, its highest since October 2023. It rose while oil fell. The inflation problem has outgrown the war.
• The Federal Reserve held rates steady on June 17, by a unanimous vote, and signaled its next move is more likely a hike than a cut.
• No rate relief is coming this year on the timeline most people expect. Oil made the case for us. Prices fell to $73 and inflation still climbed underneath. If oil stays cheap, inflation stays high on everything else. If the strait genuinely closes later, oil reloads the problem on top. The Fed has no room to cut either way.
• The housing market did not freeze. Home sales and prices rose in May. Buyers are treating mortgage rates near 6.5% as the new normal instead of waiting them out.

What changed this month

In plain order of importance for a homeowner or buyer.

Consumer prices rose 4.2% over the year in May, the highest reading since April 2023, according to the U.S. Bureau of Labor Statistics, the agency that measures inflation through the Consumer Price Index (CPI). (Source: BLS.) Energy drove more than 60% of the monthly increase, with gasoline up 40.5% from a year earlier. Take out food and energy and the “core” rate was 2.9%, softer underneath but still well above the Federal Reserve’s 2% target. Most of that energy spike was measured before the peace deal, so the recent drop in oil isn’t in these numbers yet.

The Fed’s preferred inflation gauge then confirmed the problem is sticky. On June 25 the government’s Personal Consumption Expenditures (PCE) price index, the measure the Federal Reserve watches most closely, showed inflation at a 4.1% annual rate. The core version that strips out food and energy rose to 3.4%, its highest since October 2023 (Source: U.S. Bureau of Economic Analysis; CNBC). This is the single most important data point of the month. Core inflation excludes the very energy prices that were falling, and it went up anyway. That’s the proof the inflation problem is no longer about oil, and the reason the Fed has no cover to cut.

The Federal Reserve held its rate at 3.50%-3.75% on June 17 by a unanimous 12-0 vote, in the first meeting led by new Chair Kevin Warsh (Source: Federal Reserve; CNBC). The forecast underneath was the real news. The Fed’s policymakers now expect rates to end the year higher than today, a reversal from March when they expected a cut. Seventeen of eighteen officials said the risk is that inflation runs too hot. Markets now see roughly a 70% chance the Fed raises rates by September.

Other major central banks tightened in the same week. The Bank of Japan raised its rate to 1.00% on June 16, its highest since 1995 (Source: Bank of Japan; CNBC). The European Central Bank raised its key rates on June 11, lifting its deposit rate to 2.25% in its first increase since 2023 (Source: European Central Bank). The point goes beyond Japan or Europe specifically. Fighting inflation has become a worldwide effort rather than a lone American reaction to an oil shock, and that tells you the problem is bigger and stickier than the war.

The May jobs report was strong. Employers added 172,000 jobs, with unemployment steady at 4.3% (Source: BLS), more than double what economists expected, with prior months revised up. Underneath, the picture is uneven. Financial-industry employment fell by 22,000, while the gains came in restaurants, hotels, local government, and health care. People who lose jobs are staying unemployed longer. A strong headline sitting on a soft, lopsided base.

A United States-Iran agreement was signed June 17, the Strait of Hormuz reopened, and the truce survived a real scare in late June. President Trump and Iranian President Masoud Pezeshkian signed a 14-point memorandum that reopens the strait, has the United States lift its naval blockade and sanctions, and opens a 60-day window for nuclear talks (Source: NBC News; CBS News). Shipping surged and Gulf exports recovered to roughly three-quarters of prewar levels. Then, June 25 through 28, it wobbled. Iran struck two tankers and the United States hit ten Iranian military targets near the strait before both sides agreed to halt again, with talks moving to Doha (Source: CNBC). Read it as a fragile, holding truce. Real enough to bring oil down, shaky enough that a genuine re-closure stays a live risk through the 60-day window.

Oil (Brent crude) fell to around $73 a barrel, down from $108 in May and a wartime high near $138 in April. That’s its lowest since late February and a drop of roughly 30% for the quarter, the steepest quarterly decline since 2020 (Source: CNBC; Trading Economics). Shipping through the strait kept recovering. On June 27 a U.S. Navy-led body widened a route near Oman to increase traffic, and analysts now warn of a possible glut as Gulf and Russian supply floods back. The war premium is essentially gone.

America’s emergency oil stockpile is nearly tapped out, which matters only if the truce breaks. The Strategic Petroleum Reserve, the federal emergency oil supply, has fallen to about 340 million barrels, its lowest since 1983, after months of releases meant to blunt the war’s price spike (Source: U.S. Energy Information Administration; Fortune). The initial 172-million-barrel release is now winding down (Source: Semafor), and with oil back near $73 and the strait reopening, the pressure to tap more has eased. While the deal holds this is a non-issue. The reserve did its job as a bridge and sits well above its 150-million-barrel legal floor. But the cushion that absorbed the March spike is largely spent, and refilling it takes years, not months. So if the strait closes again during the negotiation, there’s far less buffer left, and analysts warn pump prices could spike harder than they did the first time.

The average 30-year mortgage rate was 6.49% as of June 25, up a hair from 6.47% the week before and down from 6.77% a year ago, according to Freddie Mac’s weekly survey (Source: Freddie Mac). Freddie Mac’s chief economist noted rates have held steady for about six weeks. Daily trackers put the rate near 6.5% at month-end.

Home sales rose 3.2% in May, to a record median price of $429,300, with 4.5 months of inventory, according to the National Association of Realtors (NAR), the main trade group that tracks home sales (Source: NAR). That’s the 35th straight month of year-over-year price gains, and affordability actually improved because incomes are rising slightly faster than prices.

Pending sales, homes under contract but not yet closed, rose 4.8% over the year in every region of the country (Source: NAR). NAR’s chief economist described buyers accepting “above-6% mortgage rates as the new normal.” That single phrase is the backbone of this issue.

Gold broke below $4,000, and silver slid with it. Gold slipped under $4,000 an ounce on July 1, down from about $4,150 in mid-June, its lowest in roughly eight months, off about 11% on the month and 14% on the quarter, its steepest quarterly drop since 2013 (Source: Trading Economics / Kitco data). The driver is the same thing driving our rate calls. A hawkish Fed, rising Treasury yields, and a firm dollar make cash and bonds more attractive than gold. More on that honesty point below.

The prediction scorecard

Here’s what makes this publication different from market commentary. We write our forecasts down, then grade them in public. The hits, the misses, and the reasoning behind both.

We also grade them honestly, and that part is worth explaining in plain terms, because it’s the number people ask about. We don’t just count how many calls came true. We weight each one by how hard it was to get right. Picture two predictions. Saying mortgage rates will land somewhere between 3% and 9% is almost impossible to get wrong, so it earns almost nothing. Saying they’ll hold in the mid-6s is a real, specific call, so it earns real credit. Grade every forecast that way and the number comes out lower than a simple hit rate would. It’s the honest one, and it’s the one we stand behind. (The technical name for this, if you want it, is calibration-weighting.)

Where we stand: 26 forecasts formally graded so far. Two numbers tell the story, and the gap between them is the honest part.

Start with direction, which is simply whether a number went up or down. That’s the easier call, and we’ve been right about 86% of the time. Reading that rates were more likely to rise than fall, or that oil had further to drop, is the kind of call we get right most months.

The harder test is how far a number moved, and how specific we were willing to be about it. Some things are easy to estimate, so getting them roughly right earns little credit. Others are genuinely hard, like where oil settles after a war, or the exact month a rate cut finally lands. A bold, narrow call that nails one of those is worth far more than an easy one, and a vague call that couldn’t really miss is worth almost nothing. Grade every forecast by that difficulty and we land around 54 out of 100. It comes out lower than the direction number on purpose, because it’s the one that separates real skill from safe-and-vague, and it’s the bar we hold ourselves to.

We also track 107 separate indicators each month, and we never blend the two. The indicators are the breadth of what we watch. The score is the accuracy of what we actually predict.

How last month’s calls are tracking

Most resolve at the end of the quarter or later, so these are progress reports, not final grades.

• The Fed delivers zero rate cuts in 2026. Trending toward a hit, strengthening. The Fed held and signaled a possible hike. We called no cuts when most forecasters still expected them. Our best call.
• The 30-year mortgage rate stays above 6%. Trending toward a hit. It’s 6.49% and hasn’t touched 6% since February.
• Oil averages above $95. Missed, and we were confident. We published this at high confidence, betting the war would keep oil high. We were wrong. The peace deal reopened the strait and oil fell to around $73, and even a brief flare of strikes in late June didn’t reverse it. Our clearest miss, and the market settled it against us.
• Gold stays above $4,300 (quarterly average). Trending toward a miss. Gold broke below $4,000 on July 1 and fell about 14% for the quarter. The quarter’s earlier strength may still carry the average, but the trend has turned hard against this call.
• Gold holds above $4,200. Missed. Gold slipped below $4,000, well under the floor.
• Coastal-premium homes outperform Texas/Florida growth metros. Not yet resolved. Local data updates at quarter-end.
• At least one more state loses a major home insurer. Not yet resolved. No new exit reported yet.
• The Strait of Hormuz returns to near-normal flow. Trending toward a hit, fragile. It reopened in mid-June, which went against our own base case that the war would drag on. The hedge paid. The main forecast’s logic didn’t.
• Economic growth comes in below 1.5% for 2026. Trending toward a miss. The job market re-accelerated and consumers kept spending. The slowdown we expected isn’t showing up.

Where we’ve been wrong, and why

We give our misses the same space as our hits. Three honest items.

The oil bet was the big one. We told you oil was the master variable. It was, and it moved the opposite way from our forecast. We spent most of our confidence on the war getting worse and under-weighted the chance of a deal. The deal happened, oil dropped roughly $35, and our oil forecast is now a settled miss. Iran even threatened to re-close the strait in late June and oil still fell. The deeper lesson is about how we framed it. We built everything on one chain of cause and effect and treated the peaceful outcome as unlikely. We’ve fixed that. This issue’s forecast is built so it holds up no matter which way oil goes next, and the past month showed why that matters.

The second one stings. The same move that’s proving our rate calls right is breaking our gold calls. The Fed’s hawkish turn and the stronger dollar are exactly why “no cuts” and “mortgages above 6%” are tracking as wins, and exactly why gold has now broken below $4,000, through both our $4,200 floor and toward our $4,300 quarterly call. We don’t get to claim the rate wins and quietly drop the gold misses. They’re two sides of the same coin. Last month we called this thinning. This month it broke, and we’re saying so.

Third, foreign demand for U.S. government bonds. We’d earlier suggested foreign buyers were pulling back from Treasuries. The data shows the opposite, now confirmed a third time. We were directionally wrong, we said so last issue, and we’re repeating it here so the correction sticks.

The most important honesty item

Our May base case was called “The War-Inflation Trap,” and we gave it 50% odds. Its trigger for being confirmed was May inflation above 4%, or the new Fed Chair signaling a hike. Both happened. So by its own terms, the scenario was right.

But the reason we gave was wrong. We said inflation was being driven by the war and high oil. The war calmed down, oil fell, and inflation stayed high anyway, driven by services, wages, and central banks worldwide. Right answer, wrong reason. That’s not a win to celebrate. It’s a flaw to fix. So this issue renames the base case from war-driven inflation to inflation that no longer needs the war to keep going.

Our forecast for the rest of 2026, and why

Here’s what we expect through year-end, in plain terms, with the reasoning for each. Confidence levels: High (we’d be surprised to be wrong), Medium (more likely than not), Lower (a real possibility, not a base case).

1. No interest-rate cuts from the Federal Reserve this year, and a hike is now more likely than a cut. (High.) Inflation at 4.2% is more than double the Fed’s 2% goal, and the Fed’s own June forecast shifted toward raising rates. We see the earliest realistic cut in 2027. A central bank does not cut into rising inflation.

2. Mortgage rates stay in the mid-6% range, roughly 6.3% to 6.7%, for the rest of the year. Don’t plan around rates under 6%. (High.) Mortgage rates follow the 10-year Treasury bond and expectations for inflation. Neither is falling. Even when the Fed eventually does cut, mortgage rates may not drop as much as people assume, because long-term rates are now driven more by inflation fears than by Fed policy.

3. Inflation stays uncomfortably high all year. It may ease slightly if oil stays cheap, but the underlying rate keeps it well above normal. (Medium-High.) The problem has moved off oil, which the Fed can’t control and tends to look past, and into services and wages, which are stickier. The June 25 PCE report already showed this, with core inflation rising to 3.4% even as energy fell. Our near-term test: we expect June consumer prices, reported July 10, to tick down modestly to 4.1% or lower, led by the drop in oil. If they don’t, the problem is worse than the optimists think.

4. Oil settles in the $75-85 range while the deal holds, and would spike back toward $100 if the strait genuinely closes during the 60-day negotiation. (Medium, depends on the war.) The war premium is gone. The late-June flare-up was real, with Iran hitting tankers and the United States striking back near the strait, yet oil still fell to around $73 because flows kept recovering and both sides halted within days. The remaining risk is the delivery phase. The deal runs on a 60-day clock, Lebanon is a live fuse, and hundreds of vessels are still working through the strait. A genuine, sustained re-closure would reload the energy problem, and it would land harder than the first shock, because the emergency reserve that cushioned March is now largely spent. That stays a tail risk rather than the base case. The past month showed it’s not hypothetical.

5. No national housing crash, but three very different markets. (Medium.) Sales and prices rose in May, and buyers are adapting to higher rates rather than disappearing. The strength isn’t evenly spread. We expect coastal-premium markets to hold or rise modestly, the suburban middle to go flat or slightly down, and rate-sensitive inland and commuter markets to stay soft. The biggest wild card is white-collar layoffs. If job cuts in finance and technology keep building, the suburban-middle buyer pool weakens.

6. Slower economic growth, but not a recession this year on current data. (Medium.) We’d been more pessimistic, and the data pushed back. The job market re-accelerated and consumers kept spending, so we’re adjusting. The risk is later. High rates and rising layoffs are a slow-acting drag, not an instant one.

The one forecast that ties it all together: the relief most people are waiting for, falling rates and falling mortgages and a reactivated housing market, is not coming in 2026. That holds whether oil rises or falls, which is the whole point. It does not depend on the war.

What this means for you, through the end of the year

This is the part to act on. Find your situation.

If you’re waiting to buy until rates drop, the wait probably doesn’t pay off this year. The data points to mortgage rates staying in the mid-6% range through December, not falling to 5-point-something. If a home works for your life and your budget at today’s rate, waiting for a 2026 rate cut is waiting for something the numbers don’t support. Where you can find relief is from homebuilders. Many are buying down rates by 2 to 3 percentage points on new construction, which does more for your monthly payment than any Fed move likely this year.

If you own and don’t have to sell, holding is the supported move, especially in a coastal-premium market where prices should hold or rise. There’s no forced-sale pressure in this data and no crash to get ahead of.

If you have to sell this year, especially in a softer inland or suburban market, price it right from day one. Don’t list high and wait for a recovery the data doesn’t promise. The buyers are there, but they’re cautious and rate-conscious, and the homes that sell are the ones priced to the most recent comparable sale, not above it. For a local read on how these three markets play out across San Diego, Orange, and Riverside County, see the regional newsletter being released and found here.

If you work in finance or technology, watch the layoff trend closely, for your own income and because it’s the single biggest risk to the value of a suburban-middle home. The strong jobs headline is hiding real weakness in white-collar fields.

If you’re deciding what to do with savings and cash, high rates have an upside. Cash and short-term savings keep paying well, which is the flip side of no rate cuts. The hard-asset trade in gold and silver has now broken sharply, with gold falling below $4,000 after a long run. Whether that’s a deeper turn or a pause depends on whether the Fed follows through on its tougher talk, which so far it is. This is general framing, not personalized advice. Your own mix depends on your timeline and taxes.

The bottom line for everyone: plan your year around the world in front of you, high-but-stable rates and stickier inflation and a housing market split into three, not around the rate-cut rescue that consensus expected six months ago and the data keeps pushing further away.

The three scenarios

Weights below are the model’s read as of July 1. The data since June 26, with core inflation up and oil and gold down on a hawkish Fed, supports the base case and argues against raising Resolution.

Sticky Inflation, No Cuts, most likely (50%). Inflation holds near or above 4% regardless of the war. The Fed holds all year with a live chance of a hike. Mortgages stay in the mid-6s. This is where the current data points, and the June 25 PCE report reinforced it.

The Grind (35%). Cheaper oil slowly pulls inflation down through the fall, the Fed holds, and the first cut waits until 2027. Possible if the oil relief keeps feeding through and core inflation finally eases.

Resolution (15%). The peace deal holds, oil falls into the $60s and $70s, inflation cools, and the Fed cuts late this year. Oil is already near $73 and the deal is advancing. But core inflation is still rising and the late-June flare-up shows the deal isn’t locked, so this stays the least likely path.

What would change our mind

We turn more optimistic only if June inflation falls, the core rate eases, and the Fed softens its tone at its late-July meeting. One soft month isn’t enough.

The whole picture gets worse if the Strait of Hormuz physically closes and stays closed. That reloads the oil problem on top of already-high inflation.

Our logged test: June consumer prices, reported July 10, come in at 4.1% or lower, led by cheaper energy. (Internal forecast ID: M-260620-01.)

Frequently asked questions

Did the Iran war just end?

A peace agreement was signed June 17 and the Strait of Hormuz reopened. The truce was tested in late June, with Iran hitting two tankers and the United States striking back near the strait, before both sides halted again and moved talks to Doha. Call it a fragile but holding truce, not a settled peace. The next 60 days are the test.

If oil fell, why is inflation still high?

Because inflation is no longer mainly an oil story. Consumer prices rose 4.2% over the year, and the Fed’s preferred core gauge, which excludes food and energy, actually rose to 3.4% in the June 25 report, climbing even as oil fell. The job market is strong, and the Federal Reserve, Bank of Japan, and European Central Bank all turned tougher on inflation in the same week. Oil was never the whole problem.

Will mortgage rates drop below 6% in 2026?

Mortgage rates are unlikely to drop below 6% in 2026. The average 30-year rate was 6.49% in late June per Freddie Mac, the Federal Reserve signaled its next move is more likely a hike than a cut, and markets price a roughly 70% chance of a hike by September. We expect rates to stay in the mid-6% range, roughly 6.3% to 6.7%, through year-end.

Is the housing market crashing in 2026?

No. U.S. existing-home sales rose 3.2% in May 2026 to a record median price of $429,300, and pending sales rose 4.8% year over year in every region, per the National Association of Realtors. The market is splitting by segment rather than crashing, strongest in coastal-premium areas and softest in rate-sensitive inland areas.

How is Ray Stendall positioning clients?

Every conversation starts with one question. Which of the three markets is your specific property in, and what does that mean for the right move? A national-average number is the wrong tool for a coastal home, and it’s the wrong tool for an inland one. The differences between markets are the whole story.

The bottom line

Oil broke, and inflation didn’t. The shock most people were waiting to end actually eased, and the rate relief still didn’t come, because the inflation problem outgrew the war. For the rest of 2026, expect rates to stay high, inflation to stay uncomfortable, and the housing market to keep splitting into three. Plan around that, and around which of the three markets your own real estate sits in, not around a rate-cut rescue the data does not support.

If you want to know which of those three markets your own real estate sits in, and what that means for your next move, call or text Ray Stendall at 858-877-0484, or visit stendallrealtygroup.com. Stendall Realty Group, eXp Realty, DRE #02038682.

The Monthly Intelligence Report tracks macroeconomic and housing data monthly and publishes a public prediction scorecard, honestly graded so that hard, specific calls count for more than easy ones. Written by Ray Stendall.

Ray Stendall is a licensed real estate broker (California DRE 02038682), operating under eXp Realty out of Carlsbad, California. The analysis here is national in scope. This report is for educational and informational purposes only and is not investment, legal, tax, or financial advice. Make decisions with qualified professionals familiar with your situation. Past performance does not guarantee future results, and the scorecard reflects historical model performance rather than a guarantee of future accuracy. The score is judged by how hard each call was: bold, specific forecasts earn more credit than wide, safe ones, and internal self-checks are left out. The plain, unweighted figures are available on request.