Impact of the Ongoing Middle East Conflict on U.S. Housing Market

As the conflict in the Middle East continues into April 2026, the U.S. housing market is experiencing significant challenges, primarily due to rising mortgage rates. The average 30-year fixed mortgage rate has increased to 6.46 percent, up from 6.38 percent the previous week, marking the highest level since early September 2025, according to Freddie Mac. This rise follows a period when rates had dipped below 6 percent prior to the onset of the war. The escalation of the conflict has also led to a surge in oil prices, which have increased by over 50 percent since late February, contributing to higher costs for American consumers.

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The ongoing war has exacerbated inflationary pressures, with the Organization for Economic Cooperation and Development projecting U.S. inflation to rise to 4.2 percent in 2026, up from 2.6 percent in 2025. The average price of gasoline has reached $4.08 per gallon, reflecting a 37 percent increase since the conflict began. Economists, including Eugenio Alemán from Raymond James, suggest that as long as the conflict poses a threat to oil prices, markets will continue to anticipate higher inflation risks, which will likely result in elevated mortgage rates.

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Prior to the war, there were signs of recovery in the housing market, with home prices rising by 0.9 percent in January 2026, the smallest annual gain since 2023. This increase, combined with a temporary dip in mortgage rates, had sparked renewed interest among potential home buyers. However, the resurgence of conflict has stifled this momentum, leading to a stagnation in home sales as many homeowners remain hesitant to relinquish their low-rate mortgages secured during the COVID-19 pandemic.

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Heather Long, chief economist at Navy Federal Credit Union, noted, “Unfortunately, the war in Iran has halted the momentum” that the housing market was beginning to build. This sentiment reflects a broader concern among economists regarding the impact of geopolitical instability on domestic economic recovery.

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Critics argue that the government's response to the conflict and its economic implications has been inadequate. They contend that the administration should implement measures to stabilize energy prices and mitigate inflationary pressures, which are adversely affecting the housing market and overall economic stability.

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While the rise in mortgage rates and inflation is widely reported, there is some discrepancy regarding the exact figures and projections. Different economic analysts may offer varying forecasts on the potential trajectory of inflation and its impact on mortgage rates, indicating a need for ongoing monitoring of the situation.

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As the conflict persists, economists and market analysts will continue to assess its implications on the U.S. housing market and broader economy. Future developments in the Middle East will likely play a crucial role in shaping mortgage rates and inflation expectations in the coming months.

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