Home sales are pushing higher despite rising interest rates, largely driven by the ongoing shortage of available inventory.
At the same time, builders have started adjusting prices to keep sales moving, but overall, the median home price has remained relatively stable, highlighting the balance between limited supply and steady demand.
Oil is now trading well over $100 a barrel with no clear signs of meaningful easing. Just two months ago, we saw prices dip below $60, and mortgage rates followed, briefly dropping under 6%.
Since then, the conflict with Iran has changed the entire trajectory.
Oil has surged to multi-year highs due to supply disruptions and ongoing tension in the Middle East, particularly around the Strait of Hormuz. That matters because energy prices feed directly into inflation, and inflation is the single biggest driver of interest rates.
Here’s the chain reaction playing out in real time:
- Conflict disrupts oil supply
- Oil prices spike
- Inflation expectations rise
- The Fed stays higher for longer
- Bond yields increase
- Mortgage rates move up
We saw this almost immediately, rates jumped from below 6% to the mid-6% range as the conflict escalated.
And the longer this conflict drags on, the more it shifts from a short-term shock to a structural issue. The IMF is already warning that prolonged conflict could push oil toward $125 and keep inflation elevated globally.
How this hits housing:
- Affordability gets squeezed (higher monthly payments)
- Buyer demand softens at the margins
- Sellers hesitate → inventory stays tight
- Builders adjust pricing to keep volume moving
So you end up with a strange but very real dynamic:
slower activity, but stable pricing, because supply never really loosens.
Bottom line:
You’re not just watching an oil story, you’re watching a rate story. And right now, oil is acting as the throttle.
If oil stays elevated, mortgage rates aren’t coming down in any meaningful way. If oil cools, rates will follow pretty quickly.
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