The U.S. housing market is presenting a paradoxical landscape this spring: home shoppers are finding more leverage and favorable conditions in many areas, even as the economic fallout from the war with Iran pushes mortgage rates higher, threatening to dampen sales. Mortgage rates, which had recently touched a three-and-a-half-year low, have seen a sharp increase, injecting fresh uncertainty into what is traditionally the busiest time for real estate.
The Shadow of War on Mortgage Rates
Since the conflict with Iran began, mortgage rates have been on an upward trajectory. Surging energy prices have heightened worries about inflation, subsequently pushing up the yield on U.S. 10-year Treasury bonds, which lenders use as a benchmark for pricing home loans. As recently as the last week of February, the average rate on a 30-year mortgage had dropped to just under 6%, its lowest level in more than three and a half years. However, by the first week of April 2026, this rate climbed to 6.46%, marking its highest level in nearly seven months.
This rapid increase is already impacting buyer behavior. While current rates remain lower than a year ago, their recent upward trend has led to a slowdown in mortgage applications. Joel Berner, senior economist at Realtor.com, stated, ‘The war in Iran has seriously complicated the spring buying season.’ He anticipates 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.’
A Shifting Landscape for Home Shoppers
Despite the headwinds from rising rates, home shoppers who are able to proceed with a purchase this spring are encountering a more buyer-friendly market than in the previous year. This shift grants them greater leverage in negotiations, with sellers often more willing to consider concessions such as lowering initial asking prices, contributing to closing costs, or funding repairs to finalize a deal, according to real estate agents.
In the Dallas-Fort Worth metro area, for instance, lower listing prices and an increased supply of homes are compelling sellers to price more competitively or offer incentives. Matthew Crites, an agent with Coldwell Banker Realty, observed, ‘It’s been a really good buyer’s market to kind of start the year off with.’
This dynamic played out for Anne King, a 57-year-old contract administrator in Fort Worth. She successfully negotiated $10,000 off the $275,000 asking price for a three-bedroom, two-bath ranch-style house, secured an additional $5,000 for closing costs, and another $12,000 for roof repairs after an inspection. King, who finalized her purchase in late February just before the conflict escalated, locked in a 6% mortgage rate and plans to refinance when rates drop. She noted, ‘Fortunately for me, the seller was in a position they needed to sell.’
Inventory Rises, Prices Soften
Nationally, while the inventory of homes for sale remains low by historical standards, active listings—which include all homes on the market not yet under contract—saw a nearly 8% jump in February from a year earlier, according to data from Realtor.com. This increase is not uniform across the U.S., with the West, Midwest, and South significantly outpacing the Northeast.
Specifically, 43 of the 50 largest metro areas reported more homes for sale in February compared to the previous year, with listings rising between 10% and 38.5% in markets such as Seattle, Indianapolis, Las Vegas, Houston, and Denver. As properties linger on the market for longer periods, prices have begun to fall. The median listing price in February was down from a year earlier in just over half of the nation’s 50 biggest metro areas. Notable declines include nearly 9% in Austin and Memphis, and more than 5% in Washington D.C., San Diego, and Los Angeles.
Sellers Face New Realities
Further evidence of a buyer-friendly shift comes from Redfin, which estimates that in February, there were approximately 46% more sellers than prospective buyers nationally. This figure is up from about 30% a year earlier and represents the largest gap between buyers and sellers since Redfin began tracking this data in 2013. Metro areas like Miami, Nashville, and Austin are among those where sellers most significantly outnumber buyers.
The U.S. housing market has been in a sales slump since 2022, when mortgage rates began their ascent from pandemic-era lows. Sales of previously occupied U.S. homes remained essentially flat last year, stuck at a 30-year low, and have continued to be sluggish in January and February compared to a year prior. Jo Chavez, a Redfin agent in Kansas City, advises her selling clients to anticipate that their homes may not sell immediately and to adopt a ‘reasonable’ approach to pricing. She cautions against overpricing based on past neighborhood sales, noting, ‘that’s obviously not a logical approach, because there were less sales last year.’
In Olathe, Kansas, Gail and David Sanders experienced this firsthand. They listed their four-bedroom, three-bath home in late February at $535,000. Despite holding open houses and lowering the price to $525,000, they had yet to receive any offers by the end of March, putting their plans to move closer to family on hold. Gail Sanders, a senior claims director, explained, ‘I don’t want to be stuck with two house mortgages on the off chance.’
Lingering Affordability Hurdles
Despite the slowing pace of home price growth or outright declines in many metro areas, affordability remains a significant challenge for many aspiring homebuyers, primarily because wage growth has not kept pace with home prices. According to the National Association of Realtors, the median price of an existing home sold in February was $398,000, which is nearly five times the median household income—a stark contrast to the historic rule of thumb that homes generally cost three times household income.
The recent increase in mortgage rates exacerbates this affordability issue. For example, on a $400,000 home with a 20% down payment and a 30-year mortgage, a 6% rate translates to a monthly payment of approximately $2,248. At the current 6.4% rate, that payment climbs to $2,331. While these rates are still lower than a year ago, they are significantly higher than the sub-3% averages available during most of 2020 and 2021, when the economy grappled with the coronavirus pandemic and its aftermath. The market has cooled considerably from that earlier period, when rock-bottom rates fueled a frenzy of bidding wars and soaring prices, a scenario now ‘far from the norm.’
Ultimately, the spring housing market presents a complex picture. While increased inventory and a shift in negotiating power offer a glimmer of opportunity for determined home shoppers, the escalating geopolitical tensions and their impact on mortgage rates introduce a substantial element of caution. Buyers must weigh the benefits of a less competitive market against the rising cost of borrowing, making strategic timing and financial planning more critical than ever.
