President Donald Trump arrives to speak about the Iran war from the Cross Hall of the White House on Wednesday, April 1, 2026, in Washington.
In the weeks leading up to the war against Iran, the Trump Administration had economic news to celebrate, as the interest rates on new home loans had dropped to their lowest levels in nearly four years. At the time it seemed as if the stagnant U.S. housing market was finally improving. Then President Donald Trump launched the war, and now, writes economic reporter Sam Sutton at Politico, “less than two months later, the outlook has sharply deteriorated.”
There has been no shortage of economic shocks in the wake of the closure of the Strait of Hormuz and strikes on various energy facilities, and while the price of gas has gotten plenty of headlines, less attention has gone to the fact that mortgage rates have climbed by nearly half a percentage point. In March, existing home sales fell to a nine-month low, while applications for new home loans have declined for four weeks in a row. Incredibly, “consumers are more pessimistic now than they were at the height of the pandemic.”
“People are worried,” says Mike Simonsen, chief economist at the leading housing firm Compass. “I was on a call with 500 agents today, and that was definitely one of the comments that popped up: We’re worried about war. We’re worried about what happens because of war.”
This is bad news for the GOP heading into the midterms, as “housing affordability has been at the core of cost-of-living issues that have dogged Republicans in recent elections.” Voters who don’t feel like they’ve seen improvement on the issue are likely to punish Trump and his allies at the polls.
“Rates have been migrating up again — especially since Iran — and that’s because of the inflation threat from higher oil prices,” says Stephen Moore, who is not only a former economist at the high conservative Heritage Foundation, but has acted as an unofficial adviser to Trump. “The problem with higher mortgage rates is that it hurts the seller and the buyer, so the only person that helps is the bank. It’s a very negative thing.”
While the housing market had been showing signs of improvement due to a number of executive and congressional actions taken over the past year, as the war drags on, it has not only driven up mortgage rates, but has hit Americans in the pocketbook in other ways that impact their ability to buy homes. With prices rising, “economists have also been dialing up their forecasts for the likelihood of a recession," and the “prospect of a slumping economy and rising consumer prices will make it that much harder to convince would-be homebuyers to come off the sidelines.”
According to Moore, Republicans have an uphill battle if they’re to “persuade Americans that this short-term pain is worth whatever long-term gain” they get from defeating Iran. But with the conflict showing little sign of ending, “it doesn’t feel victorious.”