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I'll be working my ass off since I'm in the hospitality industry during Obon, so yes, travel will be difficult. Expect high prices and crowding everywhere, except perhaps in Tokyo since people go back to their ancestral homes. Trains going out of Tokyo will be extremely crowded at the beginning of Obon, as well as trains coming into Tokyo at the end.
I would highly recommend making any accommodation reservations ASAP.
Traveling during Obon? A strange game. The only winning move is not to play.
Will you be needing a hotel during your stay? It’s only a month out until Obon. See if there are any rooms available using an online booking site.
I know that I would consider making plans a month before obon late, but not impossible. It will cost more during this time though.