By Mike Bodeen · 9 March 2026
Could the Iranian War Do the Same?
Last week I wrote about how the Iranian war will likely raise mortgage rates from a recent drop of just under 6% due to the anticipation that higher oil prices and less global supply will increase inflation.
On cue, oil rose to $91 per barrel (up from $69?) and gasoline in Arizona rose 41 cents per gallon in a week. Mortgage rates that had briefly dropped to just under 6% rose to 6.14%.
Though I had more than a quarter tank in my car last Friday, I decided to stop by Costo to gas-up. When I saw cars lining up outside their parking lot at 10:00am I drove on by as time was in short supply that day.
It’s a conflicting market, and these are conflicting times. In general, times of uncertainty and chaos do not bode well for the stability of interest rates. They react as to what they believe the near or far future economic conditions will be in place.
Before we continue, lets get an up-to-date look at our Phoenix Metro market and how the market is currently trending:
Active Listings: 25,502 vs 23,934 last year – up 6.6% – and up 3.7% from 24,593 last month (Trending Up – Favors Buyer)
Under Contract Listings: 8,720 vs 8,471 last year – up 2.9% – and up 15% from 5,564 last month (Trending Up – Favors Sellers)
Monthly Sales: 5,870 vs 5,814 last year – up 1.0% – and up 21% from 4,861 last month (Trending Up – Favors Sellers)
Monthly Average Sales Price per Sq. Ft: $314 vs $311 last year – up 0.9% – and up 0.02% from $314 last month (Trending Up – Favors Sellers)
Monthly Median Sales Price: $450,000 vs $459,000 last year – down 2.0% – but up 0.7% from $447,000 last month (Trending Up – Favors Sellers)
The continued and recent drops in mortgage rates were bringing buyers out, which was manifested by the large (15%) increase in homes under contract from last month and last year. This however, is balanced by the increase in the number of listings which has kept the market at bay, along with a negative jobs report which came out last week as well.
It seemed like yesterday that the Covid19 Pandemic threatened to send real estate prices into the tank. And why wouldn’t it? And why didn’t it? Back then as we were masking up and sheltering in place, it seemed for millions that working from their current home wasn’t working out so well, so they sold and bought and rates helped the cause as they were so low.
Why were they low? Chat GPT says in short: COVID caused economic panic → the Fed slashed rates and bought mortgage bonds → investor demand for safe assets surged → yields fell → mortgage rates hit historic lows.
Well here we are today:
The Iran war is causing economic panic. Check.
The Fed slashed rates and bought mortgage bonds. Dropping not slashed.
Investor demand for safe assets surged. In process.
Yields fell. They were slowly falling until this past week.
Mortgage rates hit historic lows. No.
Nothing is inconceivable so a radical drop in rates could happen. But on the other hand, the market could go in the opposite direction hitting much higher interest rates. That will hit the breaks on real estate recovery.
In the short term, our rates will continue to head north, unless chaos and insecurity ceases to be a factor.
What say you?