MW Should you buy or sell a home now? What the Iran conflict means for the spring home-buying season.
Andrew Keshner
Mortgage rates dipping below 6% raised hopes for an active spring home-buying season. Then the U.S.-Iran conflict erupted.
The economic picture has grown even more complex for home buyers this spring.
A long-awaited dip in mortgage rates last week injected momentum into the stalled U.S. housing market, but the military conflict in Iran is a new stumbling block for would-be home buyers and sellers.
Days before American and Israeli strikes on Iran, mortgage rates dipped under 6% for the first time since 2022 - leading some economists to predict that the spring home-buying season could be busy after years of sluggish home sales. But now, the outbreak of war in the Middle East is clouding the picture.
There are two possible paths ahead, experts say. And only one seems preferable for buyers and sellers in a housing market that's been constrained by high interest rates and out-of-reach prices for several years.
If the conflict is short-lived and doesn't balloon fuel prices and Treasury yields for a long period, housing-industry experts say mortgage rates should stick roughly where they are. In that case, the health of America's job market would be a key driver on mortgage rates and home-buyer demand, they note.
"If the employment data comes in weak, mortgage rates could fall further and help unlock more housing activity," said Jeff DerGurahian, chief investment officer and head economist at LoanDepot $(LDI)$, a major mortgage lender.
February payroll data from ADP $(ADP)$ will be released on Wednesday, followed by the February jobs report on Friday.
Redfin $(RKT)$ is projecting 3% more home sales than last year and 1% price growth during 2026 in a "slow transition to a healthier market," said Daryl Fairweather, chief economist at Redfin, following the U.S. strike on Iran.
For now, the Iran conflict "adds to volatility more than anything else," Fairweather said Monday. Job numbers and retail sales figures will be more consequential data points for housing this week than what happens in the Middle East, she added.
But the Middle East turmoil presents another possible path - and it's far less favorable for the U.S. housing market. "If there's a sustained conflict and oil prices remain high, then that could keep rates elevated," Fairweather said.
The Federal Reserve doesn't set mortgage rates; rather, the interest rates on 30-year fixed mortgages tend to follow the yield on the 10-year Treasury note BX:TMUBMUSD10Y. On Tuesday, those yields were higher after rising Monday on concerns the fighting would rekindle inflation. The stock market SPX continued a sharp slide lower on Tuesday.
There are still big questions about how the Iran conflict impacts America's economy and inflation, said Mike Fratantoni, chief economist at the Mortgage Bankers Association.
"The net impact is likely to be higher rates," he said. "Mortgage rates dropped below 6% last week, but current trends indicate they are moving higher this week and will likely stay within MBA's 2026 expected forecast range of 6% to 6.5%."
The average rate on a 30-year fixed-rate mortgage was 6.13% as of Tuesday afternoon, according to Mortgage News Daily.
Will potential home buyers get spooked?
To understand where mortgage rates are going, it's important to watch the 10-year yield, said Kathy Bostjancic, chief economist at Nationwide. What's also important in the upcoming home-buying season - but tougher to measure - is the willingness of would-be home buyers to make a major financial decision at an uncertain point.
"If there's uncertainty and people are less confident about the economic outlook, or their personal finances, it could make them more hesitant," she said.
Geopolitical uncertainty shouldn't upend the financial plans that households have been preparing, some financial advisers say.
Still, the Middle East turmoil will likely put a chill on the spring home-buying season, according to Georgetown University professor Francesco D'Acunto, who studies how households make money decisions.
Consumers pay extra attention to broader economic conditions when they are deciding whether to proceed with a major investment like a home purchase, he said. If households feel unsure about devoting much of their wealth to an illiquid asset like a house when they may need the cash for other expenses, they will wait, D'Acunto told MarketWatch.
Gas prices and grocery prices carry a lot of power in consumer psychology, said D'Acunto, who studies how households make money decisions. "Whenever those very prices, gas and groceries, move and change, that's exactly when households become very wary about inflation going forward."
A gallon of gas averaged $3.10 on Tuesday, up more than 15 cents than a week ago, according to AAA. Gas prices were already rising with increasing seasonal demand, but drivers could pay up to 50 cents more later this spring because of the Iran conflict, one expert said. Crude oil prices account for almost half the cost of a gallon of gas, according to the U.S. Energy Information Administration.
Oil prices could be high for "a little while," but President Donald Trump said Tuesday they would fall after U.S. operations in Iran were done. A day earlier, he said the military campaign to dismantle Iran's military and nuclear weapon capabilities could go for four or five weeks but it might last longer.
Even when global leaders say the fighting has concluded, many home buyers will move cautiously, D'Acunto said. "That doesn't mean households will immediately revert back to thinking everything is cleared. ...That very likely goes beyond the spring season."
-Andrew Keshner
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(END) Dow Jones Newswires
March 03, 2026 17:56 ET (22:56 GMT)
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