Weekly Real Estate News
The benchmark 10-year U.S. Treasury yield surged above 5.05% Wednesday, reaching its highest level since 2007 and creating fresh upward pressure on borrowing costs across the housing and mortgage markets.
The 10-year yield jumped 8.7 basis points to 5.054% following stronger-than-expected U.S. business activity data, according to Reuters market reporting.
The move came after S&P Global reported that its preliminary U.S. Composite PMI Output Index rose to 58.4 in September from 56.0 in August. That was the strongest reading since July 2021 and signaled accelerating activity across the manufacturing and services sectors.
Manufacturing PMI increased to 57.0, while services activity climbed to 58.7. S&P Global said U.S. business activity expanded at the fastest pace in more than five years, with stronger demand and hiring accompanied by rising cost pressures.
Why the Treasury Move Matters for Mortgage Rates
The 10-year Treasury yield is one of the most closely watched benchmarks for mortgage pricing. Mortgage rates do not move in lockstep with Treasury yields, but sustained increases in the 10-year typically place upward pressure on mortgage borrowing costs.
Wednesday’s Treasury move comes as mortgage rates are already testing affordability. WRE News reported earlier Wednesday that the Mortgage Bankers Association’s average contract rate for conforming 30-year fixed mortgages increased 15 basis points to 7.12% for the week ending Sept. 18, the highest reading since May 2024.
WRE News previously reported that the 10-year Treasury reached 5% earlier this month. Wednesday’s move is materially different: the yield pushed further above that threshold and reached its highest level since 2007.
Markets Increase Bets on Another Fed Hike
The stronger economic data also caused traders to increase expectations for additional Federal Reserve tightening.
Fed funds futures traders were pricing approximately a 73% probability of an October rate increase following Wednesday’s data, up from 53% earlier in the day, according to Reuters.
The interest-rate-sensitive two-year Treasury yield also climbed, rising to 4.862%, its highest level since June 2024.
Federal Reserve Governor Michael Barr added to the pressure Wednesday when he said further policy adjustments would likely be necessary to return inflation to the Fed’s 2% target. WRE News covered Barr’s housing and rate remarks here.
For housing, the combination is increasingly difficult: mortgage rates are already above 7% by several measures, Treasury yields are at multi-decade highs, and expectations for additional Fed tightening are rising rather than retreating.
Sources: Reuters market reporting, Sept. 23, 2026; S&P Global Flash U.S. PMI, September 2026.
