How the Iran war could crush the U.S. housing recovery, and it's not just about mortgage rates

The immediate impact of the war with Iran on the U.S.

housing market has been a sharp rise in mortgage rates.

One day before the strikes began, the average rate on the 30-year fixed loan was 5.99%, according to Mortgage News Daily.

It is now hovering around 6.5%.

"While that of course would not be a strong market, it would represent a market that had turned a corner, with 2026 acting as a 'reset' year," wrote Mischa Fisher, Zillow's chief economist, in a report Tuesday.

"However, new uncertainty has emerged via energy prices and inflation concerns, adding fresh complexity to our outlook."
Fisher used the increase in mortgage rates, due to increased concerns over inflation and the "potential for a slight uptick in the unemployment rate given reduced consumer spending power resulting from higher prices."
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"As the housing market approaches the 'best time to sell' season, it sits in a precarious position, caught between long-term improvements and sudden short-term instability," wrote Jake Krimmel, senior economist at Realtor.com in a weekly report.