For the first time in years, the spring housing market was setting up to actually help buyers. Then it wasn't.
Heading into March, the stars were quietly aligning. Inventory was up. Home price growth had slowed to just 0.74% year-over-year in January, per Cotality's Home Price Index. And on February 27, the 30-year fixed mortgage rate dropped to 5.98% — the first time it had fallen below 6% since 2022, crossing what CNN described as a "key psychological threshold." Realtor.com senior economist Joel Berner called it a setup for "a solid spring buying season." Price growth had slowed, inventory was up, and agents were cautiously optimistic.
That was before the bombs.
When the U.S. and Israel launched strikes on Iran on February 28, mortgage rates reversed almost immediately. By March 5, the 30-year fixed was back at 6% — and climbing. Oil's surge past $100 stoked inflation fears, pushing bond yields higher and dragging mortgage rates with them. Redfin chief economist Daryl Fairweather explained the dynamic: "Fear of higher inflation because of higher oil prices tends to push rates up, but fear about global stability tends to push rates down." So far, inflation fears are winning. Data from Redfin showed both pending sales and new listings fell last week. Sellers who might have listed are pausing. Buyers are doing the same.
Bright MLS chief economist Lisa Sturtevant put it plainly: "Affordability is still a challenge and consumers are feeling anxious. Many buyers are going to be cautious as we enter the spring housing market." Not everyone is pessimistic — purchase mortgage applications were up 10% year-over-year as recently as last week, and First American economist Sam Williamson noted that inventory improvements and affordability gains "continue to support a cautiously optimistic outlook."
But "cautiously optimistic" is doing a lot of heavy lifting when oil is still above $90 and the war isn't over. J.P. Morgan had already forecast home prices to stall at 0% nationally in 2026. That was before the Strait of Hormuz closed.