The economic fallout from the war with Iran is starting to reshape the spring homebuying season by raising borrowing costs, according to Associated Press reporting. Mortgage rates have moved higher since the start of the conflict, and lenders have pointed to surging energy prices and worries about higher inflation as pressures that increase yields on U.S. 10-year Treasury bonds, a benchmark used in pricing home loans.
The latest data highlighted in the report show the average rate on a 30-year mortgage slipped to just under 6% in the last week of February, then climbed to 6.46% this week, its highest level in nearly seven months. The conflict is also adding uncertainty to the broader U.S. economic outlook as the job market “is sputtering,” the report said.
Joel Berner, a senior economist at Realtor.com, said the war has “seriously complicated the spring buying season,” adding that he expects some buyers will pause as rates rise and economic uncertainty grows. Berner said the effect could be delayed decision-making rather than purchases made before rates move further up.
Even with rates rising, the housing market’s micro-dynamics in many areas have been leaning toward buyers, real estate agents said. The report described a national shift in how quickly homes are being absorbed, alongside an increase in active listings compared with a year earlier, which can make sellers more willing to negotiate.
One example cited in the report came from Fort Worth, Texas, where homebuyer Anne King said she was able to negotiate a lower price and additional seller-funded items. King set her sights on a three-bedroom, two-bath ranch-style home listed at $275,000, and the contract administrator offered $10,000 below the listing price while also asking the seller to cover $5,000 in closing costs. After a home inspection revealed roof damage, the seller agreed to add $12,000 for repairs, King said.
Agents also described buyer leverage in metro areas including Dallas-Fort Worth, where lower listing prices and more homes on the market are pushing sellers to price more competitively or offer incentives. Matthew Crites, an agent with Coldwell Banker Realty, said it “a really good buyer’s market to kind of start the year off with,” reflecting the negotiating power buyers can have when inventory is rising and properties sit longer.
Across many markets, listings have been building even though overall inventory levels remain constrained by historical standards, the report said. Realtor.com data cited by AP showed active listings jumped nearly 8% in February from a year earlier, and that listings rose faster in parts of the West, Midwest and South than in the Northeast. The report also said 43 of the 50 largest metro areas had more homes for sale in February than a year earlier, with increases ranging from 10% to 38.5% in several metros including Seattle, Indianapolis, Las Vegas and Houston and Denver.
With more homes lingering on the market, prices started to soften in places, AP reported. The median listing price fell year over year in just over half of the 50 largest metro areas in February, including nearly a 9% drop in Austin and Memphis and declines of more than 5% in Washington, D.C., San Diego and Los Angeles. Redfin’s analysis cited in the report also estimated that sellers outnumbered prospective buyers nationally by about 46% in February, compared with about 30% a year earlier—an assessment that the company said represents the largest gap on records going back to 2013.
The report placed the spring dynamic in a longer housing context, saying the U.S. housing market has been in a sales slump since 2022 when mortgage rates climbed from pandemic-era lows. It said sales of previously occupied homes were “essentially flat” last year and remained sluggish into early this year, with sales declining in January and February compared with a year earlier. AP also cited National Association of Realtors data saying the median price of an existing home sold in February was $398,000, and noted that figure was nearly five times median household income.
As affordability pressures remain, the report added, rate increases can tip the balance by making monthly payments more expensive even when prices are no longer accelerating as quickly. For example, AP cited the calculation that on a $400,000 home near downtown Dallas, a 30-year mortgage at 6% with a 20% down payment would produce a monthly payment of about $2,248, but at a 6.4% rate the payment would rise to about $2,331. The report said mortgage rates are still higher than the sub-3% averages available to homebuyers during most of 2020 and 2021.
Sellers can feel the shift when buyers wait, the report said, and agents urged caution about setting price expectations based on recent neighborhood comps. In Kansas City, Redfin agent Jo Chavez told clients to expect their home may not sell right away and said sellers should be “reasonable” with pricing. She said there are sellers who assume a price premium by comparing with neighbor sales from earlier periods when demand was stronger.
In Kansas City, AP reported that the median listing price was not falling and rose 4.1% in February from a year earlier, citing Realtor.com, while the number of homes on the market soared by nearly 20%. The report also described the experience of Gail Sanders and her husband David, who put their four-bedroom, three-bath home in Olathe, Kansas, on the market in late February and, even after lowering the asking price from $535,000 to $525,000, had yet to receive offers as March ended. Gail Sanders, a senior claims director, said she did not want to be stuck with two mortgages if another home they wanted did not come through.
While agents reported buyer leverage—through negotiation on price or seller-paid concessions—the report said the Iran-linked rate climb is already showing up in market behavior. It said the upward trend in mortgage rates has led to a slowdown in mortgage applications, and further increases could dampen home sales during the traditionally busiest time of the year for housing.