Housing market trends favor home shoppers, but Iran war clouds the
outlook for mortgage rates
[April 06, 2026] By
ALEX VEIGA
LOS ANGELES (AP) — The economic fallout from the war with Iran is
driving up the cost of buying a home, even as other housing market
trends in many parts of the country favor home shoppers this spring.
Mortgage rates have been rising since the war began, as surging energy
prices heighten worries about higher inflation, pushing up the yield on
U.S. 10-year Treasury bonds, which lenders use as a guide to pricing
home loans.
As recently as the last week of February, the average rate on a 30-year
mortgage dropped to just under 6%, its lowest level in more than three
and a half years. It climbed this week to 6.46%, its highest level in
nearly seven months.
The conflict is also injecting more uncertainty into the U.S. economic
outlook at a time when the job market is sputtering.
While rates are still down from a year ago, their recent upward trend
has already led to a slowdown in mortgage applications. Further
increases threaten to put a damper on home sales during what’s
traditionally the busiest time of the year for the housing market.
“The war in Iran has seriously complicated the spring buying season,”
said Joel Berner, senior economist at Realtor.com. “I expect that many
buyers will be put off by rising rates and mounting economic
uncertainty, choosing to bide their time rather than jumping on board
for a purchase before rates go up.”
Home shoppers who can afford to buy at current mortgage rates this
spring are likely to find a more buyer-friendly housing market than this
time last year. That means they'll have more leverage when negotiating
with sellers, who in many cases are watching their property go unsold
for weeks, potentially making them more willing to lower their initial
asking price or offer buyers money for closing costs, repairs or other
concessions in order to get a deal done, real estate agents say.
In the Dallas-Fort Worth metro area, lower listing prices and more homes
on the market are forcing many sellers to price their home more
competitively or consider offering some incentives to land a buyer, said
Matthew Crites, an agent with Coldwell Banker Realty.
“It’s been a really good buyer’s market to kind of start the year off
with,” he said.
The trends helped give home shopper Anne King a strong hand when she set
her sights on a three-bedroom, two-bath ranch-style house in Fort Worth
listed at $275,000.
The contract administrator offered $10,000 below the listing price. She
also asked that the seller kick in $5,000 toward closing costs. The
seller accepted, and later agreed to throw in another $12,000 for
repairs after a home inspection revealed roof damage.
“Fortunately for me, the seller was in a position they needed to sell,”
said King, 57. The purchase was finalized in late February, just before
the start of the conflict in the Middle East.
King had hoped mortgage rates would ease further before she bought the
home, but decided it made sense to buy sooner, rather than risk having
to compete this spring against more homebuyers who could potentially
trigger a bidding war -- something she experienced last May when she
bought a two-bedroom, two-bath townhouse in Arlington, Texas.
She locked in a 6% rate on her mortgage and plans to refinance to a
lower rate whenever rates drop.
“I feel like I got a good deal on this property, and that’s all that
matters,” she said.
Home shoppers gain more leverage
While the inventory of homes for sale nationally is still low by
historical standards, active listings — a tally that encompasses all
homes on the market except those pending a finalized sale — jumped
nearly 8% in February from a year earlier, according to data from
Realtor.com.
The increase varies across the U.S., with the West, Midwest and South
far outpacing the Northeast. Still, some 43 of the 50 largest metro
areas had more homes for sale in February than a year earlier, with
listings up between 10% and 38.5% in many markets, including Seattle,
Indianapolis, Las Vegas and Houston and Denver.
As homes take longer to sell, prices have started falling. The median
listing price was down in February from a year earlier in just over half
of the nation’s biggest 50 metro areas, including a nearly 9% drop in
Austin and Memphis, and declines of more than 5% in Washington D.C., San
Diego and Los Angeles.
[to top of second column] |
Gail and David Sanders stand in front of their home which they have
been trying to sell Wednesday, March 25, 2026, in Olathe, Kan. (AP
Photo/Charlie Riedel)
 In another sign that buyers may have
the edge negotiating with sellers this spring, an analysis by Redfin
estimates that there were about 46% more sellers than prospective
buyers in the market nationally in February. That’s up from about
30% a year earlier and represents the largest gap between buyers and
sellers on records going back to 2013, according to Redfin.
Miami, Nashville and Austin are among the metro areas where sellers
most outnumber buyers, Redfin found.
A buyer's market, if you can afford it
The U.S. housing market has been in a sales slump since 2022, when
mortgage rates began to climb from pandemic-era lows. Sales of
previously occupied U.S. homes were essentially flat last year,
stuck at a 30-year low. They have remained sluggish so far this
year, declining in January and February versus a year earlier.
While the pace of home price growth has slowed or fallen in many
metro areas, affordability hurdles remain daunting for many aspiring
homebuyers because wage growth has not kept up with home prices.
Consider, the median price of an existing home sold in February was
$398,000, according to the National Association of Realtors. That's
nearly five times the median household income. A historic rule of
thumb was that homes generally cost three times the household
income.
The recent increase in mortgage rates adds slightly to the
affordability challenge. On a $400,000 home near downtown Dallas,
for example, factoring in a 20% down payment and a 30-year mortgage
at 6%, the buyer’s monthly payment would be about $2,248. At a 6.4%
rate, that payment would climb to $2,331.
And while mortgage rates are still lower than a year ago, making
monthly payments more manageable, rates are still much higher than
the sub-3% averages available to homebuyers during most of 2020 and
2021 as the weakened economy dealt with the coronavirus pandemic and
its aftermath.
Sellers under pressure
The housing market has cooled considerably since earlier this
decade, when rock-bottom mortgage rates set off a frenzy that sent
home prices soaring. Back then, it wasn’t uncommon for a home to
fetch well above the seller’s asking price after receiving offers
from multiple buyers.
While some sellers are still receiving multiple offers now, it’s far
from the norm.
Jo Chavez, a Redfin agent in Kansas City, tells clients looking to
sell to expect that their home probably won’t sell right away. She
also advises them to be “reasonable” with how they price their home.
“We have a lot of sellers who have that idea of like, ‘well, my
neighbors sold for this much, and so I think I should price $10,000
above them,’” said Chavez. “And that’s obviously not a logical
approach, because there were less sales last year.”
Kansas City is among the few metro areas where the median listing
price isn’t falling. It rose 4.1% in February from a year earlier,
according to Realtor.com. However, the number of homes on the market
soared by nearly 20%.
Gail Sanders and her husband, David, put their four-bedroom,
three-bath home in Olathe, Kansas, on the market in late February.
But even after hosting a couple of open houses, and after lowering
their asking price from $535,000 to $525,000, the couple had yet to
receive any offers as March drew to a close.
The couple wants to sell the house and buy a home in another Kansas
City suburb closer to their three adult children and grandchildren.
But until they find a buyer, those plans are on hold.
“We just didn’t think it was fair to somebody else to put a
contingent offer on (another house), but then also lock ourselves
into something when we weren’t sure how fast ours was going to
move,” said Gail Sanders, a senior claims director. “I don’t want to
be stuck with two house mortgages on the off chance.”
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