Iran war disrupts housing market and raises inflation concerns

In July 2026, strong home sales were reported, largely reflecting buyer activity from June, prior to the end of the United States' ceasefire with Iran. The ongoing conflict in Iran has raised concerns about energy prices and inflation, which are affecting borrowing costs across the economy. Joel Berner, a senior economist at Realtor.com, noted that the complications in the Strait of Hormuz are keeping oil prices elevated, which in turn influences the costs of goods and services. As a result, expectations about inflation have risen, leading to a slowdown in home purchases.

Zillow's analysis indicated a year-over-year increase of 7 percent in home sales for July, marking the strongest annual increase seen so far in 2026. However, there has been a noticeable slowdown in newly pending home sales, which only increased by 0.3 percent from the previous year and fell by 7.7 percent from June levels. The disruption in oil supply due to the conflict is being felt in mortgage markets, contributing to the decline in home purchases.

Drew Powers, founder of Powers Financial Group, emphasized that volatility in gasoline prices and disrupted shipping routes create instability in trade, which negatively impacts multiple sectors, including housing. Homebuilder KB Home has also reported challenges related to the Iran war, leading to a lowered full-year forecast and weakened consumer demand amid rising economic uncertainty.

As the conflict continues, experts suggest that buyers should not expect lower mortgage rates anytime soon. The early fall is anticipated to offer a favorable mix of low listing prices and reduced competition, making it a potentially advantageous time for buyers. However, the long-term risks associated with the war and its impact on mortgage rates and geopolitical stability remain a concern for the housing market.