Higher mortgage rates as a result of disruptions caused by the Iran war are threatening to derail the spring homebuying rebound.
are threatening to derail the spring homebuying rebound, that many experts hoped would revive the largely frozen U.S. housing market.that lower mortgage rates and slower home price growth would revive the sleepy U.
S. housing market in 2026, improving affordability and boosting demand.Buyers however are proving sensitive to other factors: mortgage rates have climbed back to above the 6 percent mark, concerns over the future of the U.S. economy are growing, hiring rates are low, and long-term unemployment is rising.Mortgage rates are now lower than they were this time of the year in 2025, but after falling below 6 percent last month for the first time in years, it has been disappointing for many Americans to see them climb back above that mark in the days and weeks following the start of thejumped 16 basis points to 6.38 percent, up from 6.22 percent the previous week and 6.18 percent a month earlier.“This marks the largest 1-week increase since April 2025 and the largest 3-week increase since October 2024,” Realtor.com senior economist Joel Berner said in a statement shared with. “Rising mortgage rates are a major barrier to what should otherwise be a very favorable spring homebuying season.” Mortgage rates have followed the movement of the 10-Year Treasury yield, which has been growing “as fears of rampant inflation stemming from the war spook bond investors,” Berner said. This upward pressure in the debt market is driving mortgage rates higher, the economist explained.Spring is traditionally the busiest time of the year for the U.S. housing market, with the highest number of homebuyers flocking to it and competing for properties. But even before the war in Iran was launched, Berner said, home sales activity in 2026 has been muted. “New home sales had their weakest month in over three years this January and existing home sales were down 1.4 percent year-over-year in February,” Berner said. “These both occurred while mortgage rates were actually falling earlier in the year, suggesting that buyers were facing a crisis of confidence even before the affordability crunch of rising mortgage rates,” he added. “Given the soft employment figures from February, it is understandable that buyers are worried about their personal finances. Ultimately, the current upward pressure on mortgage rates, stemming from the war and inflation fears, serves as the primary barrier preventing the spring housing market from capitalizing on otherwise favorable inventory and price conditions.” According to property listing service Bright MLS's chief economist and mortgage veteran Lisa Sturtevant, the recent increase in mortgage rates “acts as a significant headwind” for the spring housing market. “New purchase applications were showing signs of resiliency earlier this month, with the Mortgage Bankers Association reporting mortgage applications higher than last year. However, the mortgage applications data showed a notable slide last week as buyers react to the sudden jump in financing costs,” she said in a statement shared with, home sales were down by 3.7 percent year-over-year, at 318,107. In the same month, the median sale price of the typical U.S. home was $429,189, up 0.9 percent from a year earlier.Whether mortgage rates will continue rising or come back down will depend on how long the Middle East conflict will keep oil prices elevated. “Energy prices ripple through the rest of the economy, as they impact the cost to produce and deliver any physical goods,” Berner said. “Fears that price levels in the future will rise make tomorrow’s money worth less and make borrowing money today—such as to buy a home–more expensive.” Sturtevant believes that “if the conflict remains limited and energy prices stabilize, we could see rates settle back down toward 6 percent,” she said. “However, for now, the rebounding spring homebuying season many had been hoping for is being tempered by these external pressures, leading to a more limited and uncertain market environment.”
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