Redfin reveals blunt prediction on mortgage rates, housing market

Housing market experts - and average Americans looking to buy and sell real estate - are accustomed to watching economic data reports for a sense of what to expect from upcoming changes in mortgage rates and the housing market in general.

With that in mind, May 28 was a busy day for reviewing a few important reports that were expected to have direct or indirect impacts on home transactions.

Real estate technology company Redfin knew ahead of time that these data were forthcoming, but remained focused on what it predicted was the largest geopolitical economic factor that homebuyers and sellers would continue to contend with.

First, here are three of the key economic data points released May 28:

• The annual personal consumption expenditures (PCE) price index increased to 3.8% from the same month a year ago, driven upward primarily by an acceleration in energy goods and services, according to the U.S. Bureau of Economic Analysis.
• Initial weekly unemployment insurance applications ticked up by 5,000 to a seasonally adjusted 215,000 for the week ending May 23, according to the U.S. Department of Labor.
• Sales of new single-family houses dropped 6.2% in April to a seasonally adjusted annual rate of 622,000 units, falling 11.3% below the sales pace from the previous year, according to the U.S. Census Bureau.

Redfin predicts Iran war's continued impact on mortgage rates

But before these reports dropped, Redfin's head of economics research Chen Zhao had already weighed in with a prediction about the main factor affecting mortgage rates, and with it, the housing market in general.

"Three months in, the Iran war is still driving rates more than economic data," Zhao wrote. "There are a few important economics reports this week, but markets will remain focused on how close we are to a deal that reopens the Strait of Hormuz."

"Energy is the biggest unknown," Zhao continued. "If the Strait of Hormuz reopens soon and oil prices normalize quickly, inflation risk will cool and the Fed can breathe a sign of relief."

"If the closure drags on or oil prices remain elevated even after reopening, higher energy prices could cause supply chain issues that bleed into core inflation, which keeps mortgage rates higher for longer."

Redfin examines the Fed, interest rates

Interest rate increases and decreases are only indirectly related to mortgage rate fluctuations (bond markets, particularly 10-year treasury yields, are more directly related), but it's important to track the Fed and understand its thinking about monetary policy.

For the week of May 19 to 22, economic data was mostly stable, Redfin reported.

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"But markets continued to react to a Fed that seems increasingly likely to hike," Zhao wrote. "The April FOMC minutes showed that a majority of participants thought some policy firming could become appropriate if inflation stayed persistently above 2%."

"Markets are now pricing in more risk that the next move is eventually a hike rather than a cut," she added.

Freddie Mac reports weekly 30-year FRM at 6.53%

The average rate for a 30‑year fixed mortgage rose to 6.53% on May 28, slightly higher than last week's 6.51%, according to Freddie Mac. At this point last year, the 30‑year rate stood at 6.89%.

The 15‑year fixed mortgage averaged 5.87%, up from 5.85% a week earlier. One year ago, the 15‑year rate was 6.03%.

"Pending home sales have increased three months in a row, indicating there's latent demand and homebuyers are ready to jump back into the market if mortgage rates decline," Freddie Mac's chief economist Sam Khater said.

Other inflation drivers affecting rates

Two factors other than the opening of the Strait of Hormuz are important to consider with regard to inflationary pressures, according to Redfin.

For one, there is real inflation with regard to AI-driven software, as the AI continuing surge creates demand for software, cloud computing, chips and other such technology.

"But there are also data quirks and methodological issues that may be overstating this part of inflation," Redfin wrote. "Correcting for those issues could bring measured software inflation down 5%-15%."

"That matters because software has 30 times the weight in PCE as it does in CPI (Consumer Price Index), so it can have an outsized effect on the Fed's preferred inflation measure."

The other major issue, Redfin suggests, is tariffs.

"Some forecasters think tariff-driven inflation could reverse and take as much as 0.7 percentage points off inflation this year," Zhao wrote. "But it is hard to know when that reversal happens.

"It is even harder because tariff policy is still unsettled after the Supreme Court ruled that IEEPA (the International Emergency Economic Powers Act) does not authorize the president to impose tariffs, and the administration has not yet announced a durable replacement policy."

Related: Zillow predicts major mortgage rate, housing market change

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This story was originally published May 30, 2026 at 6:33 AM.