{"id":7350,"date":"2026-04-02T23:18:40","date_gmt":"2026-04-03T03:18:40","guid":{"rendered":"https:\/\/www.deeds.com\/articles\/?p=7350"},"modified":"2026-04-02T23:18:41","modified_gmt":"2026-04-03T03:18:41","slug":"how-will-war-inflated-oil-prices-impact-home-sales-and-mortgage-rates","status":"publish","type":"post","link":"https:\/\/www.deeds.com\/articles\/how-will-war-inflated-oil-prices-impact-home-sales-and-mortgage-rates\/","title":{"rendered":"How Will War-Inflated Oil Prices Impact Home Sales and Mortgage Rates?"},"content":{"rendered":"\n
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Spoiler: Mortgage rates at the 6% level may be looking awfully good a few months from now.<\/em><\/strong><\/p>\n\n\n\n

The U.S.-Israeli war with Iran could \u201cderail the crucial spring housing market as oil prices soar,\u201d Realtor.com<\/em> said as oil prices spiked above $100 a barrel.<\/p>\n\n\n\n

The website, owned by the National Association of REALTORS\u00ae, has bluntly stated:<\/p>\n\n\n\n

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The U.S.-Israeli war with Iran threatens to derail the crucial spring housing market as oil prices soar, raising the specter of stagflation and rising mortgage rates.<\/em><\/p>\n<\/blockquote>\n\n\n\n

It\u2019s a major concern for the housing economy<\/a>. The word \u201cstagflation\u201d is especially alarming. We\u2019ll get to that in a minute.<\/p>\n\n\n\n\n\n\n\n

More Showers Than Flowers for the Spring Market?<\/h2>\n\n\n\n

It\u2019s spring, mortgage rates have eased, and we were headed into a potentially strong season of deed transfers. In February, the interest on home loans dipped down below 6%. Realtor.com<\/em> reported that hopeful sellers were actually putting their homes on the market. Finally, sellers could feel OK about giving up their under-5% loans when they sold. Agents were ready for a strong spring season, and so were the lenders.<\/p>\n\n\n\n

Well, until February 27. That\u2019s the day war began, targeting Iran. Now, analysts worry that people will hang back to rework their budgets. The average mortgage interest rate is going up, reacting to the oil market.  Recession fears are back.<\/p>\n\n\n\n

When oil prices rise, so do the prices for many other things. Travel, groceries, anything that involves transportation, anything made of plastic. So many products are made with petroleum\u2014not just fuel. Companies pass their higher costs to all of us.<\/p>\n\n\n\n

Realtor.com<\/em>\u00ae senior economist Jake Krimmel notes that this is the second time in two years that panic has struck housing and commercial markets. That\u2019s a reference to the swollen tariff costs<\/a> buyers are already paying.<\/p>\n\n\n\n

The built-up frustration in the world of everyday people is hard to ignore. This will be the fourth year straight that the spring real estate market has suffered under economic shocks. There have been tariffs, shrinking worker pools, halted interest rate cuts. New wars are being started, and retaliation is already in full swing. Oil tankers have stalled in the Strait of Hormuz. International shipping routes have become toll routes.<\/p>\n\n\n\n

As prices go up, so do the federal banking officials\u2019 worries about more inflation. They don\u2019t want to bring interest rates down during inflation, because low rates stimulate buying and can make price surges harder to control.<\/p>\n\n\n\n

Market watchers had been hoping for perhaps two rate cuts before the end of 2026. Now, they expect no cuts at all. Some even expect a rate hike. In other words, mortgage rates at the 6% level may be looking awfully good in a few months\u2019 time.<\/p>\n\n\n\n

Still Higher Costs for Building and Renovation?<\/h2>\n\n\n\n
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People are already feeling uncertainty about the costs of living and their (or their employers\u2019) business costs. The last thing they want is home prices to rise further. A typical home is already valued well over $400K now. So it\u2019s not a convenient time to see building material and labor costs rise. <\/p>\n\n\n\n

Still, raw materials, tiles and flooring, furnishings and cabinets, electric equipment, paints and solvents are expenses to watch. And fuel costs increase the shipping rates for all of it.<\/p>\n\n\n\n

As things stand now, workers for building and ground crews are in high demand and low supply. Traditionally, a third of the construction worker population is foreign-born. Current government policies are inhospitable to that third of the workforce.<\/em><\/p>\n\n\n\n

Frustrated builders are asking the Trump administration to ease its harsh policies. As Politico<\/em> described this scene earlier this year:<\/p>\n\n\n\n

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Construction executives have held multiple meetings over the last month with the White House and Congress to discuss how immigration busts on job sites and in communities are scaring away employees, making it more expensive to build homes in a market desperate for new supply.<\/em><\/p>\n<\/blockquote>\n\n\n\n

As we\u2019ve noted ever since the pandemic days, builders can\u2019t sell homes that they can\u2019t get materials to make, or find people to construct, so builders are producing smaller homes overall.<\/p>\n\n\n\n

What Is Stagflation? What Would It Do to Home Buyers and Sellers?<\/h2>\n\n\n\n

Economists fear and loathe stagflation. It\u2019s one of the worst economic situations a country can experience. Its two key traits are rising inflation and unemployment\u2014both occurring at the same time.<\/p>\n\n\n\n

The U.S. has fallen into a stagflation period before. It just so happens that the reason for it was an oil crisis. In the 1970s, when oil shipments stopped, prices surged. Next to arrive? A recession. The Federal Reserve can respond to a recession by hiking interest rates\u2014and that\u2019s what it did. This was a body blow to people already facing economic hardship. Mortgage rates soared. So did the jobless rate. You can imagine the effects on hopeful home buyers and sellers. Could it happen again?<\/p>\n\n\n\n

We could head into stagflation trouble if:<\/p>\n\n\n\n