Iran Conflict Sends Mortgage Rates Climbing, Threatening North Texas Housing Market
The U.S. War with Iran, which began on February 28, 2026, is already impacting the North Texas housing market. Mortgage rates have risen for the fourth consecutive week, reversing a recent downward trend. Before the conflict, rates had dipped to 5.98%, but now stand at 6.38% for a conventional 30-year home loan.
Inflation Fears Drive Rate Hikes
“The recent military action throws a large uncertainty on inflation, and that is going to make a U-turn on the mortgage rates,” explains Sriram Villupuram, an associate professor at the University of Texas-Arlington’s finance and real estate department. The conflict is driving up oil prices, creating a ripple effect throughout the economy.
“This shock ripples through the entire economy,” says Joel Berner, senior economist at Realtor.com. “Homebuyers in North Texas and across the country, who are already facing affordability challenges, now have an even steeper hill to climb.”
Strait of Hormuz Disruption Fuels Concerns
The Strait of Hormuz, a critical shipping channel for crude oil, is a key factor. Approximately 20% of the world’s oil supply passes through this narrow strait, and disruptions to shipping are exacerbating inflationary pressures. Oil prices have reached their highest point in almost four years in early March.
Construction Costs Also on the Rise
Higher oil prices are also impacting the construction industry. Industry officials report that the profitability and viability of projects across North Texas are threatened, leading to increased costs for new and ongoing construction. This adds another burden to homebuyers already facing higher borrowing costs.
Spring Sales Season at Risk
Spring is typically the peak season for home sales, but rising mortgage rates are causing potential buyers to pause their plans. Weekly data from the Mortgage Bankers Association shows mortgage applications dropped 11% for the second consecutive week, with home purchases falling by 5%.
Median home prices in the Dallas-Plano-Irving region have remained relatively flat at over $400,000 since 2023, even as the Fort Worth-Arlington-Grapevine region has hovered around $350,000. High interest rates and stable home prices are creating significant affordability challenges.
Builders Adjusted Margins, But War Adds New Pressure
Ted Wilson, principal and president of Residential Strategies Inc., notes that the market was sustained by builders offering discounts and adjusting their margins, leading to growing home sales late last year. However, the recent conflict has pushed mortgage rates up by approximately 45 basis points in the last two weeks, raising concerns.
Oil Price Forecasts and Mortgage Rate Outlook
Goldman Sachs Group Inc. Recently raised its oil price forecasts for 2026, predicting prices could peak at $115 per barrel in April before retreating to $80 by year-end, assuming six weeks of supply disruptions. Experts forecast mortgage rates will remain above 6% for the remainder of the year.
Berner of Realtor.com predicts an average mortgage rate of 6.3% for 2026, stating, “We anticipate the inflationary effects of the war will linger in mortgage rates at least as long as oil prices are elevated and perhaps longer.”
Frequently Asked Questions
Q: How is the conflict in Iran affecting the price of oil?
A: The conflict is disrupting oil supply routes, particularly through the Strait of Hormuz, leading to increased oil prices.
Q: What impact will higher oil prices have on the housing market?
A: Higher oil prices contribute to inflation, which drives up mortgage rates and increases the cost of construction materials.
Q: Are home prices in North Texas expected to fall?
A: Median home prices have remained relatively flat, and the combination of high interest rates and stable prices is creating affordability challenges. A significant price drop is not currently predicted, but demand may weaken.
Q: How long are mortgage rates expected to stay elevated?
A: Experts forecast mortgage rates will remain above 6% for the rest of 2026, as long as oil prices remain elevated.
Pro Tip: If you’re considering buying or selling a home, now is the time to consult with a real estate professional and financial advisor to understand how these market changes may affect your plans.
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