mortgage rates just shot higher- Spring Housing Market Turns Precarious: Rising Mortgage Rates from Iran War Offset Buyer-Friendly Shifts
Spring — traditionally the hottest season for home sales — is arriving with a heavy dose of uncertainty this year. While the market has tilted toward buyers in recent months, the escalating conflict with Iran is rewriting the script. Surging oil prices are reigniting inflation fears, forcing the Federal Reserve to pause rate cuts and pushing mortgage rates higher just as buyers hoped for relief.
The average 30-year fixed mortgage rate climbed sharply this week to 6.53% on Friday, the official start of spring, per Mortgage News Daily. That’s only 18 basis points below where it stood a year ago — a far cry from the sub-6% levels many analysts predicted at the start of 2026.
Mortgage Rates Spike on Geopolitical Heat
Higher oil prices due to Middle East disruptions are the main culprit. As energy prices climb, inflation ticks up, and the Fed is rethinking its path. What looked like a year of steadily falling rates has flipped: borrowing costs are rising, hammering affordability at the worst possible moment for the spring selling season.
Buyers Gain Ground — But Not Everywhere
Despite the rate pain, several dynamics still favor buyers:
- Homes are lingering longer on the market.
- Sellers are more open to price cuts.
- Active Inventory rose 5.6% year-over-year for the week ending March 14, according to Realtor.com.
The catch? New listings actually fell 1.4% over the same period. Inventory is growing not because sellers are flooding the market, but because homes aren’t moving — many potential sellers are sitting tight, spooked by war-related economic uncertainty.
Jonathan Miller, director of markets at StreetMatrix, summed it up: “Inventory is the bigger decider. The idea that rates are going to come down this year noticeably is generally off the table.”
Regional Tale of Two Markets
This spring won’t be uniform. Some metros are swimming in listings, others remain tight:
- Las Vegas, Seattle, Cincinnati, and Washington, D.C. saw active listings jump by more than 20% year over year in February.
- San Francisco, Chicago, Miami, and Orlando posted declines.
Home prices continue to cool overall — up just 0.7% year-over-year in January, down from 3.5% earlier in 2025 (per Cotality). The Northeast and Midwest lead in appreciation thanks to persistent low supply in places like New Jersey, Connecticut, Illinois, Wisconsin, and Nebraska.
Cotality flags 69% of major metros as overvalued, while undervalued markets (Los Angeles, New York City, San Francisco, Honolulu) could rebound in 2027 if conditions stabilize.
New Construction Offers a Silver Lining
Builders are hurting. Single-family construction dropped in January, inventories hit a 9.7-month supply, and sales fell to the lowest level since 2022. A growing number of builders are cutting prices and offering incentives to move product. For buyers willing to consider new builds, this spring could deliver better deals — though elevated land, labor, and material costs keep builders on edge.
The Bigger Picture: Uncertainty Rules
Jake Krimmel, senior economist at Realtor.com, captured the mood: “Everything seems much more unsettled and uncertain than it did just a month ago.”
The Iran conflict has dampened enthusiasm across the board. Affordability remains strained for buyers and builders alike, and the war’s outcome — whatever it may be — is keeping everyone on edge.