Here's how the Iran war is already hitting the U.S. housing market
CNBC • • business
Key Points:
- The war with Iran has caused U.S. mortgage rates to rise sharply from 5.99% to around 6.5%, reversing a prior trend of falling rates that had improved housing affordability.
- Higher mortgage rates and inflation concerns have dampened homebuyer activity, with mortgage applications dropping 5% and forecasts for home sales growth being revised downward depending on the duration of the current economic uncertainty.
- The new construction market is also feeling the impact, as KB Home lowered its full-year forecast due to reduced net orders and increased uncertainty stemming from the Middle East conflict.
- Housing inventory is rising, especially in the South and West, leading to a shift in market power toward buyers; contract cancellations have reached their highest rate since 2017, and there are now significantly more sellers than buyers.
- Despite some long-term improvements expected in the housing market, experts warn that the sector faces short-term instability as it enters the traditionally strong spring selling season.
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