What does the bond market closely influence regarding real estate?

The bond market has a significant impact on mortgage rates, which are critical for buyers financing their real estate purchases. When bonds, particularly those issued by the U.S. Treasury, are trading at different yields, it influences the interest rates set by lenders for mortgages. When bond yields rise, mortgage rates typically follow, making borrowing more expensive and potentially dampening demand for homes. Conversely, when bond yields decrease, it can lead to lower mortgage rates, encouraging more buyers to enter the market. This direct correlation makes the bond market's performance a key driver of mortgage rates, ultimately influencing the affordability and activity within the real estate market.