Will war with Iran send mortgage rates higher or lower?

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Iran battle

Now, historically, when there was navy battle within the Center East, folks would anticipate cash to stream into the U.S. greenback and the U.S. bond market as a secure haven, and oil costs would rise. However in the previous couple of years, this actually hasn’t occurred.

A part of this, I consider, is that merchants don’t worry a wider escalation within the Center East and see these occasions being contained. With the midterms developing, there isn’t a worry of an extended, protracted struggle with Iran, and Trump appears to love a fast repair and nothing too extended relating to navy actions.

We are going to regulate Sunday evening buying and selling and what occurs Monday morning, but when this goes like different latest occasions, it won't have a protracted impression. One key might be watching the availability of oil by means of the Strait of Hormuz. The bond market and mortgage charges haven’t had an excessive amount of wild motion this 12 months regardless of some actually wild headlines. The assault on Iran might be one other check of this.

10-year yield and mortgage charges

Within the 2026 HousingWire forecast, I anticipated the next ranges:

Mortgage charges between 5.75% and 6.75%

The ten-year yield fluctuating between 3.80% and 4.60%

Friday was a loopy day. Coming off a great jobless claims report and a scorching PPI inflation report, you'll have thought the 10-year yield and mortgage charges can be increased. Nevertheless, that wasn’t the case. Shares had been promoting off, there was adverse sentiment on AI taking jobs away and perhaps bond merchants bought a heads-up on the Iran state of affairs, which despatched the 10-year yield straight to a key degree on Friday. And this week is jobs week!

I get nearer to the underside finish of my forecast for 2026 on the 10-year yield and mortgage charges, so this week might be very important to see not solely how the markets react to the Iran state of affairs, but in addition the roles knowledge.

In any case, the 10-year yield closed at a 2026 low and charges ended the week decrease at 5.99%, in response to Mortgage Information Day by day, whereas Polly’s mortgage price lock knowledge exhibits a weekend price of 6.23%.

Mortgage spreads

Mortgage spreads stay a optimistic story for housing in 2026, lowering mortgage-rate volatility, and are near regular ranges.

Traditionally, mortgage spreads have ranged from 1.60% to 1.80%. Final week’s spreads closed at 1.93%.

If spreads matched the 2023 peak ranges, mortgage charges can be 1.20 share factors increased, at 7.17%. With spreads returning to regular, mortgage pricing can stay decrease for longer than in earlier years.

Realistically, we solely have 20-34 foundation factors of enchancment left within the spreads. The longer that volatility is compressed, the higher spreads can get later within the 12 months, however the large enchancment right here has already run its course.

Weekly pending gross sales

Pending dwelling gross sales knowledge supplies a week-to-week perspective, although outcomes might be affected by holidays and short-term fluctuations, reminiscent of the large winter storm in January. We had been exhibiting year-over-year progress in the beginning of the 12 months, and that snowstorm did sluggish issues down.

We simply had back-to-back weeks of optimistic year-over-year progress; this was the case earlier than the snow impacted the housing knowledge. Now we must always have another current dwelling gross sales report that might be impacted by the snow knowledge and we are able to transfer on to these stories, however you will get the very best forward-looking knowledge right here.

Weekly pending gross sales final week over the past two years:

2026: 63,209

2025: 60,410

Mortgage buy software knowledge

Buy software knowledge is a forward-looking knowledge line: the expansion right here leads gross sales roughly 30-90 days out, and we noticed 12% year-over-year progress on this knowledge line final week.

Nevertheless, what I actually worth is not less than 12-14 weeks of optimistic weekly progress. If you will get this along with year-over-year progress, we have now one thing legit for certain. For 2026, each week has proven optimistic year-over-year progress. During the last two weeks, the year-over-year progress share has elevated increased now that the snow impression has melted away.

As you'll be able to see within the chart under, we do have some seasonality within the weekly knowledge.

Right here’s 2026 thus far:

2 optimistic week-over-week prints

4 adverse week-to-week prints

1 flat week-to-week print

4 weeks of double-digit year-over-year progress

7 weeks of optimistic year-over-year progress

Weekly housing stock knowledge

Housing stock knowledge fell final week, which isn’t too stunning, since this week has proven declines previously, so I wouldn’t put a lot weight on this week’s knowledge. Hopefully, we are going to see the standard seasonal enhance in stock beginning in March. Stock is at a lot more healthy ranges now than a number of years in the past.

We've gone from 33% year-over-year progress in stock on the highest level in 2025, to eight.04% final week.

Weekly stock change: (Feb. 20-Feb. 27): Stock fell from 700,259 to 690,357

Similar week final 12 months: (Feb. 21-Feb. 28): Stock fell from 640,221 to 639,357

New listings knowledge

New listings knowledge additionally confirmed a weekly dip, which I chalk as much as seasonal shifts within the knowledge. We must always get new listings knowledge above 80,000 in the course of the seasonal peak months, which might be the realm of what regular new listings would appear to be on the low finish.

I hope for the brand new listings knowledge to vary between 80,000 and 100,000 per week in the course of the seasonal peak intervals, because it did from 2013-2019. For context, in the course of the housing bubble crash, new listings ranged from 250,000 to 400,000 per week for a number of years.

Right here is final week’s new listings knowledge for the previous two years:

2026: 50,245

2025: 60,410

Value-cut share

Usually, about one-third of houses bear value reductions earlier than they promote, reflecting the dynamic nature of the housing market. As mortgage charges and stock rise collectively, the proportion of value cuts will increase.

Nevertheless, charges are close to multiyear lows, so we are actually seeing adverse year-over-year price-cut share knowledge. This shouldn’t be stunning provided that demand has picked up barely and stock progress has slowed. We're beginning the seasonal shift increased within the price-cut knowledge so the year-over-year knowledge might be key.

The worth-cut share final week is now 1.25% decrease than this time final 12 months.

The worth-cut share for final week:

The week forward: Iran, jobs week, retail gross sales and extra

To maintain it easy, this week might be nuts! Not solely do we have now the Iran state of affairs, which may both quiet down or escalate, however it’s jobs week! We even have the ISM and retail gross sales report, Fed speeches and the jobless claims.

It'd get hectic this week, but in addition keep in mind that mortgage spreads being higher has compressed volatility with charges. Nevertheless, we at all times watch how the bond market reacts to the roles knowledge, which for me has at all times been the important thing.