Rates fell today, but even if the situation in the Middle East improves, it will take time for the U.S. economy — and the housing market — to get back on track.
Mortgage rates moved down in reaction to Tuesday’s announcement of a two-week ceasefire agreement between the U.S. and Iran, but it’s unclear whether it’s a temporary drop — or the start of a trend.
The 30-year fixed-rate mortgage fell from 6.44% to 6.38% today, according to Mortgage News Daily. With no other economic data released on April 8, the decline appears to be tied directly to the ceasefire.
Significant uncertainty remains: Given the surge in gas prices and inflationary concerns since the start of the war, real estate economists are not expecting much near-term improvement in rates.
“Mortgage rates will likely remain volatile because there is still so much uncertainty around when energy prices will come back down and how higher energy prices are impacting the global economy,” said Daryl Fairweather, chief economist at Redfin.
Currently, the spring housing market faces more headwinds — higher mortgage rates, affordability challenges and economic uncertainty — than tailwinds, noted Lisa Sturtevant, chief economist at Bright MLS.
Despite today’s easing of rates, “there is little reason to think this [ceasefire] announcement has led to a total reset for the spring housing market,” Sturtevant said. “I expect mortgage rates to remain volatile, as we’re still seeing Treasury yields reflect skepticism about a long-term resolution for the Strait of Hormuz.”
The inflation wildcard: Mortgage rates could trend higher later this week, depending on what the March inflation reports show. The current annual inflation forecast for March is 3.3%, which would be a significant jump compared to February’s reading of 2.4%.
Even with the Strait of Hormuz temporarily open to ship traffic, it’s expected to take weeks for gas prices to go down significantly. That could keep inflation elevated, which in turn would likely mean higher mortgage rates.
What’s ahead: If the war were to resume and high energy prices remain in place, the impact on home sales could be significant.
In a study published before the ceasefire announcement, Zillow estimated that if the energy shock and an ensuing uptick in unemployment ended on May 1, existing home sales would rise 3.48% compared to the year before (down from Zillow’s pre-war forecast of 4.3%). If the shock lasts throughout 2026, existing home sales would decline 0.73% year-over-year, according to the projection.
In its March report, Zillow noted there were signs that the housing market had turned a corner, however — at least compared to the beginning of the year.
“Pent-up demand from three years of low sales volume and winter storms in January and February, along with the tailwind from lower mortgage rates earlier in the year, seem to have buoyed the market as home shopping season kicked off,” said Mischa Fisher, Zillow’s chief economist.