Iran Conflict Raises Rates, Slows Housing
The Iran conflict has pushed mortgage rates above 6.64%, dampening housing demand in 2026. Recent data from the MBA, pending sales, and total pending home sales show a clear slowdown as rates rise.
The Iran conflict has pushed mortgage rates above 6.64%, dampening housing demand in 2026.
The housing market was on a growth trajectory earlier this year, buoyed by lower mortgage rates that hovered near 6%. When rates slipped below 6.64%, data improved; when they climbed toward 7%, the market tightened. The only early-year hiccup was Winter Storm Fern and the holiday season, which briefly disrupted data collection.
On March 11, a CNBC interview framed housing growth as contingent on the conflict not driving rates higher. The Federal Reserve has reportedly used the conflict as a hawkish talking point, giving bond traders permission to push rates up. A new trade war with Canada has added further pressure.
Purchase Application Trends
The MBA purchase application data, which looks 30-90 days ahead, has shown a mix of positive and negative week-to-week prints. When rates were lower, the data posted positive year-over-year growth for most of the year, with 10 weeks of double-digit growth. As rates crossed 6.64%, the prints turned negative for a period.
| Metric | 2026 |
|---|---|
| Positive week-to-week prints | 13 |
| Negative week-to-week prints | 17 |
| Flat week-to-week prints | 3 |
| Double-digit year-over-year growth weeks | 10 |
| Positive year-over-year growth weeks | 25 |
| Negative year-over-year prints | 7 |
These figures are available in the stats database.
Pending Sales Overview
The weekly pending sales index, which reflects data 30-60 days later, remained largely positive through most of the year. The decline in year-over-year growth is modest but mirrors the pattern seen when rates rise above 6.64%.
| Metric | 2026 | 2025 |
|---|---|---|
| Weekly pending sales | 66,177 | 67,173 |
| Total pending home sales | 379,819 | 376,196 |
These numbers can be cross-checked on the fixtures page.
Impact of Rising Rates
The author notes that the Iran conflict is not the sole driver of higher rates. Labor data improved early in the year, and the Fed signaled tolerance for low job growth as long as unemployment and jobless claims remained low. Inflation, particularly PCE, stayed above 3% year-over-year.
The economy continues to grow, but the conflict has pushed Fed hawks into overdrive, raising global bond yields outside China and Switzerland. Oil prices, which would normally temper a hawkish stance, remain volatile due to the conflict and the trade war with Canada.
The data presented reflect the existing home sales market, not new-home sales. As 2026 approaches September, the influence of rates above 6.64% on housing demand becomes clearer. Historically, mortgage rates would have already exceeded 7% at this point if not for improved mortgage spreads.
The analysis is based on the latest reports and data releases, with links to the relevant sections of the publication’s own data pages for further verification.
