The U.S. housing market recovery is facing new pressure as geopolitical tensions ripple through the economy. Following the escalation of the Iran war, mortgage rates have jumped from around 5.99% to roughly 6.5%, reversing what had been a trend of improving affordability for homebuyers. The impact is already showing up in demand. Mortgage applications to purchase homes dropped 5% week-over-week, signaling a slowdown in buyer activity. But the bigger issue goes beyond rates. Economists point to rising energy prices, inflation concerns, and potential increases in unemployment as additional factors weighing on the housing market outlook. New construction is already feeling the pressure, with KB Home lowering its full-year forecast after reporting weaker-than-expected demand. Meanwhile, buyer behavior is shifting: • Contract cancellations hit 13.7%, the highest since 2017 • There are now over 600,000 more sellers than buyers in the market Forecasts suggest that if current conditions persist, expected home sales growth in 2026 could slow significantly—or even turn negative. The housing market now sits at a critical point, balancing long-term recovery trends against short-term macroeconomic uncertainty. Disclaimer: This video contains AI generated content.
A law requiring that most materials in federally funded affordable housing are made in America is fully kicking in. But it is wreaking havoc on affordable developments.
