Hopes that the U.S. housing market was starting to thaw have ebbed as the war in the Middle East extended into April, raising costs for many Americans.
The average 30-year, fixed-rate mortgage rate hit 6.46 percent, the mortgage finance giant Freddie Mac said on Thursday. That’s up from 6.38 percent the week before and the highest since the first week of September. Mortgage rates fell below 6 percent before the war started, but they have been climbing ever since.
The jump in home loan rates comes as Americans are already under pressure from higher costs.
The war has pushed up oil prices, which have jumped more than 50 percent since the end of February. The average price of gasoline edged up to $4.08 a gallon on Thursday, according to data from the AAA motor club, some 37 percent higher since the war began.
Soaring energy costs have raised fears of higher inflation, which are reflected in elevated interest rates. The Organization for Economic Cooperation and Development expects U.S. inflation to surge to 4.2 percent this year, up from 2.6 percent in 2025.
“As long as the conflict remains a threat to the price of petroleum, markets are going to continue to price higher inflation risks, which will translate into higher mortgage rates,” Eugenio Alemán, the chief economist at the investment bank Raymond James, wrote in an email.
The housing market was effectively frozen after mortgage rates started to climb during the Covid-19 pandemic, when central banks rapidly raised interest rates to deal with soaring inflation. Many homeowners who locked in low rates have been reluctant to give them up, stifling home sales.
There were glimmers of optimism when the year started. Prices for existing homes rose 0.9 percent in January from the previous year, the smallest annual gain since 2023, according to the Case-Shiller home price index. The cooling of home prices, coupled with a dip in mortgage rates, had created increased demand among home buyers.
“Unfortunately, the war in Iran has halted the momentum,” Heather Long, the chief economist at Navy Federal Credit Union, said in a statement.
Gregory Schmidt is a Times business editor overseeing coverage of the European economy. He is based in London.
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