India, May 22 -- The US housing market is facing renewed pressure after mortgage rates surged sharply above 6.5%, as escalating geopolitical tensions linked to the Iran war triggered a violent selloff in Treasury markets and intensified inflation fears across the American economy.

The average rate on a 30-year fixed mortgage climbed to 6.51% this week, according to multiple housing market trackers, marking the sharpest rise in recent months and threatening to derail the fragile recovery many economists expected in the 2026 spring homebuying season.

Financial analysts say the sudden rise is directly connected to surging Treasury yields, which mortgage lenders use as a benchmark for pricing home loans. The benchmark 10-year Treasury yield...