Financial Markets- Bonds (Mortgage Rates)
The S&P has flattened out for the past month with geopolitical turbulence driving much of the ebbs and flows. The market appears to be holding its breath waiting to see if the conflict in Iran will escalate and involve other nations and cause further disruptions to the world’s oil supply. Currently the average oil price sits at nearly $80 per barrel. Prior to the Iran conflict oil traded for roughly $60 per barrel. Generally speaking, as the cost of oil increases it applies pressure on inflation. Everything costs more to the consumer, and inflation puts pressure on mortgage rates. If inflation runs at 5%, mortgage backed securities require a rate of return of around 7%, which is why we are where we are with mortgage rates.
https://tradingeconomics.com/commodity/crude-oil
With respect to mortgage rates, the higher rates go, the higher rates go…An element of insult to injury. As bonds sell off and yields rise the gap between the 10 year US Treasury and average 30 year fixed rate mortgage widens. This is because the higher mortgage rates go the more likely the mortgage would be paid off when rates drop. Essentially the speed at which a loan gets paid off is predicted to be sooner when the 30 year fixed rate mortgage is at 7% than say if the 30 year fixed rate mortgage is at 6%.
The spread between the 10 year US Treasury and the average 30 year fixed rate mortgage was 2% in March. The 10 year US T was at around 4% and the average 30 year fixed rate mortgage was around 6%. However, today, the 10 year US T is around 4.6% and the average 30 year fixed rate mortgage today is around 6.8%, or a spread of 2.2%. When it rains it pours!
https://www.mortgagenewsdaily.com/mortgage-rates/30-year-fixed
https://www.cnbc.com/quotes/US10Y
Southern Nevada Real Estate
Home sales for Clark County, NV for the month of June improved month over month and year over year marking the best June for number of home sales since 2023 despite mortgage rates going up nearly .375%. Often June closings are locked in in May so we may feel the affects of the higher rates in July. Or not who knows. I am beginning to think that 33,000 to 35,000 transactions are the new norm for Clark County, NV and we may not see the 48,000 estimated transactions that we were used to before COVID.
June Home Sales
- Total: 3,370. Year to date is 17,161. Down from 17,239 in 2025, down from 18,517 in 2024, down from 18,863 in 2023.
- Condos: 306
- Townhomes: 388
- Single Family Residences: 2,676
- Inventory = 9.625…when divided by resale SFR sales of 2,261 we come up with 4.2 months supply of homes)
- Median Priced Home holding at $490,000.
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