Rates Are Calmer As Iran Conflict Might Be Over Soon

What's Happening Today

Markets are starting the day on a calmer note after oil prices pulled back from recent highs. Stocks are higher and Mortgage Bonds are trading near unchanged levels this morning as energy markets stabilize. Oil prices dropped after comments suggesting the conflict with Iran may be nearing resolution and reports that the G7 could release a large amount of oil from global reserves if needed.

Oil Prices Pull Back From Recent Highs

• Stocks are moving higher while Mortgage Bonds are roughly unchanged this morning
• Oil prices reversed sharply lower after comments that the conflict with Iran may be nearing completion
• The G7 is reportedly discussing releasing 300 to 400 million barrels from global reserves if needed
• About 30 ships have crossed the Strait of Hormuz, an improvement from the previous near standstill
• Oil prices are settling around $86 per barrel after the recent surge

The pullback in oil prices is helping calm markets and allowing interest rates to stabilize after the recent spike tied to geopolitical tensions.

Existing Home Sales Beat Expectations

• Existing Home Sales rose 1.7 percent in February to a 4.09 million annualized pace
• The market had expected sales to decline by 0.5 percent
• January sales were revised higher, which reduced the size of the monthly gain
• The improvement reflects the lower mortgage rates seen earlier this year

The report suggests that housing demand showed improvement heading into the spring homebuying season.

Housing Inventory Is Rising But Still Tight

• Existing home inventory increased 2.4 percent to 1.29 million homes
• Inventory is up 4.9 percent compared to last year
• Months’ supply is currently 3.8 months
• A balanced housing market typically requires about 4.6 months of supply

Inventory is improving seasonally but remains well below the level needed for a balanced housing market.

Home Prices and Buyer Activity

• The median home price rose 0.8 percent month over month to $398,000
• Median prices are up 0.3 percent year over year
• First time homebuyers accounted for 34 percent of purchases
• Cash buyers represented 31 percent of transactions
• Investors accounted for 16 percent of purchases

The increase in first time homebuyer participation may be an encouraging sign as the spring buying season approaches.

Housing Sentiment Is Improving

• The MBS Highway National Housing Index rose 4 points to 47 in March
• Buyer activity increased 6 points to 53, moving above the expansion level of 50
• Nationwide, 33 percent of respondents describe buyer activity as active
• Price direction increased slightly but remains below last year’s level

These results suggest housing demand is improving, although price growth has not fully followed yet.

Small Business and Employment Signals

• The NFIB Small Business Optimism Index fell to 98.8
• This is the lowest level in five months
• Plans to hire dropped 4 points to the lowest level since the pandemic

The decline in hiring plans may signal some softness developing in the labor market.

Upcoming Inflation Data

• Tomorrow’s Consumer Price Index report will be closely watched by markets
• January inflation was 2.4 percent headline and 2.5 percent core
• February expectations are 0.3 percent headline and 0.2 percent core month over month
• If shelter inflation comes in lower than expected, inflation could surprise to the downside

This report will provide insight into where inflation stood before the jump in oil prices seen in March.

Final Takeaway

Markets are stabilizing as oil prices pull back and housing data shows improving demand heading into the spring homebuying season. While inflation data and geopolitical developments remain important factors for mortgage rates, the latest housing reports suggest buyers are returning to the market as affordability improves.

If you are a homebuyer, homeowner considering refinancing, or a real estate agent helping clients navigate this market, reach out anytime to discuss how current mortgage rate trends may impact your strategy.