Iran war upends spring housing market. Here's what real estate agents are seeing
The spring housing market was finally supposed to wake up.
After years of sluggish sales and stubbornly high mortgage rates, the stars appeared to be aligning. Rates had slipped below 6% for the first time since 2022. New listings were climbing. Optimism was in the air.
Then, the bombs started falling.
The US-Israeli military conflict with Iran, which began in late February, has thrown a massive wrench into what was shaping up to be a long-awaited spring rebound. Mortgage rates have climbed for five consecutive weeks, gas prices are surging, and homebuyers are suddenly pulling back.
Here's what real estate agents across the country are seeing on the ground, what the data actually says, and, most importantly, what you should do about it if you're trying to buy or sell a home right now.
(Spoiler: Not all the news is bad. Some buyers are finding surprising opportunities.)
The Spring Housing Market Was Poised for a Comeback
Let's rewind to late February. The housing market was quietly gearing up for a strong spring season.
Mortgage rates had fallen to just under 6%, their lowest level in more than three and a half years. For context, that threshold hadn't been crossed since 2022. Buyers who had been sitting on the sidelines for years were starting to peek back in.
Inventory was also improving. Active listings, homes on the market but not yet pending sale, jumped nearly 8% in February compared to the previous year. More supply, lower rates. That's a recipe for a balanced market.
Realtor.com's March report put it this way: "March arrived carrying genuine promise for a 2026 housing market rebound." Mortgage rates had fallen below 6% for the first time since 2022, and cautious optimism was forming around the spring homebuying season.
Then the optimism died.
Then the Iran War Changed Everything
Here's where things get interesting, and where the economic dominoes start to fall.
When the US and Israel launched attacks on Iran in late February, Iran responded by closing the Strait of Hormuz, a critical chokepoint for global oil shipments. Within days, oil prices spiked by more than 50%.
Higher oil prices lead to higher inflation expectations. Higher inflation expectations push up the yield on US 10-year Treasury bonds. And lenders use those Treasury yields to price home loans.
Translation: When oil goes up, mortgage rates go up.
The average 30-year fixed mortgage rate hit a low of 5.99% the day before the war started. By early April, it was hovering around 6.5%. That's not a massive jump in percentage terms. But for a homebuyer? On a $450,000 home with 20% down, that rate difference adds about $1,120 per year, over $33,000 over the life of the loan.
No wonder buyers are getting cold feet.
What Real Estate Agents Are Seeing on the Ground
The CNBC Housing Market Survey, which polls real estate agents nationwide, just released its first-quarter findings. The shift in buyer psychology is striking.
When agents were asked about their buyers' primary concern, about one-third said the economy. Another third said mortgage rates. That marks a big jump from just 26% in the fourth quarter.
Only 9% of agents said prices were their buyers' biggest concern, down from 18% in the previous period.
Let me pause on that for a second. A year ago, everyone was terrified of home prices. Now? Prices aren't the worry. It's everything else, job security, gas prices, the broader economy.
"They're fearful of the war, they're fearful of gas prices, [for] their job security," said Faith Harmer, an agent in the Las Vegas metropolitan area.
And those fears are translating into real behavior changes. Nineteen percent of agents said affordability concerns were causing buyers to get out of the market entirely, up from just 11% at the end of last year.
More than half of agents reported at least one contract cancellation.
"Buyers that were on the fence and deciding to buy are now on the fence and going the other direction, saying, 'I'm not going to buy,'" said Eric Bramlett, an agent in Austin, Texas.
A Redfin/Ipsos survey found that one-quarter (25%) of Americans are delaying or canceling plans for a major purchase like a home or car because of the military conflict with Iran.
The big question is: Will that number grow, or shrink, as the war continues?
One Buyer's Story: How She Won in a Shifting Market
Not everyone is running for the exits.
Meet Anne King, a 57-year-old contract administrator in Fort Worth, Texas. She found a three-bedroom, two-bath ranch-style house listed at $275,000. She offered $10,000 below the asking price. She also asked the seller to kick in $5,000 toward closing costs.
The seller said yes.
Then a home inspection revealed roof damage. King asked for another $12,000 for repairs.
The seller said yes again.
"Fortunately for me, the seller was in a position they needed to sell," King said. "I feel like I got a good deal on this property, and that's all that matters."
King locked in a 6% rate on her mortgage just before the war started. She plans to refinance when rates drop.
Here's the takeaway: In a shifting market, leverage matters. And right now, leverage is tilting toward buyers who can actually afford to transact.
Buyer's Market or Seller's Market? The Answer Is Shifting
This is the nuance most headlines miss.
Nationally, home prices have started to cool. Median list prices have now fallen year over year for five straight months. Price cuts are down, too, suggesting sellers are coming to market at more realistic prices rather than listing high and cutting later.
In the Dallas-Fort Worth metro area, lower listing prices and more homes on the market are forcing many sellers to price more competitively, or offer incentives like closing cost assistance to land a buyer.
"It's been a really good buyer's market to kind of start the year off with," said Matthew Crites, an agent with Coldwell Banker Realty.
But, and this is a big but, local markets vary wildly. In Spokane, Washington, broker Tom Hormel says the spring market sprang in mid-February and hasn't slowed down. "If you price it right, it's selling quickly," he said. "Buyers have choices. But if you price it right, it's gone."
Bottom line: We're not in a uniform buyer's market or seller's market. We're in a negotiation market. Deals are happening. But only for buyers who understand where the leverage sits.
Should You Buy or Sell Right Now?
Here's the question everyone wants answered.
If you're a buyer:
The market is more negotiable than it's been in years. Sellers are offering concessions. Homes are sitting longer, 31% of agents reported listings were on the market for more than six weeks, up from 26% in the fourth quarter.
But affordability is real challenge. Mortgage rates are higher today than they were a month ago. Your buying power has shrunk.
The smart move? Run the numbers. If you can afford the payment at today's rates and plan to stay in the home for 5+ years, buying now gives you negotiation leverage you won't have when rates eventually drop. When rates do fall, you can refinance, just like Anne King plans to do.
If you're a seller:
You can't price your home like it's 2024 anymore. Buyers are skittish. They have options. The days of multiple cash offers over asking are gone in most markets.
But that doesn't mean you can't sell. Price competitively from day one. Be prepared to offer concessions, closing cost assistance, repair credits, rate buydowns. And understand that your home might sit for a few weeks. That's not a failure. It's the new normal.
If you're waiting:
Nobody has a crystal ball. But here's what the experts are saying: Even if the war ends tomorrow, it will take time for good news to flow through the economy. Mortgage rates won't snap back to 5.99% overnight.
"At this point in the spring season, even if there is a quick resolution to the war in the Middle East, it will take time for the good news to flow through the economy," said Glen Weinberg of Fairview Commercial Lending. "Unfortunately, this spring season has almost no chance of improving."
That doesn't mean "don't buy." It means "don't wait for a perfect moment that may not come this spring."
What Happens Next?
The housing market is never static, and this spring is proving that in real time.
The Iran war has injected genuine uncertainty into what was supposed to be a recovery year. But uncertainty isn't the same as catastrophe. Buyers are still buying. Sellers are still selling. Deals are getting done.
The difference is that how you approach the market matters more than ever. The days of throwing an offer at any house and winning are over. This market rewards preparation, patience, and smart negotiation.
And honestly? That might be a good thing.
Want to Know How the Iran War Is Affecting Your Local Market?
Every housing market is different. What's happening in Austin isn't what's happening in Spokane. What works for a first-time buyer in Dallas might not work for a luxury seller in Las Vegas.
Talk to a local real estate agent who understands today's shifting conditions. They can help you run the numbers on your specific situation, whether you're buying, selling, or just trying to figure out what the heck is going on.
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