Will Rates Follow Oil's Continued Price Surge?

What's Happening Today

Markets are reacting to a sharp surge in oil prices following geopolitical developments in Iran. Stocks are moving lower and mortgage rates are facing upward pressure as oil briefly surged toward $120 per barrel. While oil prices have since eased closer to $100 after discussions of a coordinated emergency reserve release, the rapid rise in energy costs is dominating market sentiment today.

Oil Surge Driving Market Volatility

• Oil prices spiked to nearly $120 per barrel
• Oil was around $65 not long ago, meaning prices have nearly doubled in a short period
• The Strait of Hormuz has effectively been closed, disrupting a major global oil shipping route
• Iran announced a new leader, widely viewed as a hardliner, increasing concerns the conflict may last longer
• The G7 is discussing a coordinated emergency oil reserve release, which helped prices settle near $100

The surge in oil prices is driving selling across financial markets and putting upward pressure on mortgage rates in the short term.

Gas Prices Are Rising Quickly

• Gasoline prices were under $3 per gallon at the start of March
• Prices have already climbed to nearly $3.50 per gallon
• If oil prices remain elevated, gasoline could move toward $4 per gallon

Higher energy costs can quickly ripple through the economy and add to inflation concerns, which is why markets are reacting strongly to the oil spike.

Home Prices Showing Modest Growth

• ICE reported home values rose 0.13% in January
• This was the strongest monthly increase in almost a year
• Home values are up 0.4% year over year
• ICE data tends to show slightly cooler appreciation than other reports like Case-Shiller and FHFA

The data suggests home price appreciation was beginning to reaccelerate heading into the spring homebuying season.

Housing Inventory Slowly Improving

• Realtor.com reported active listings were flat month over month at 915,000 units
• Inventory is up 8 percent compared to last year
• Even with the increase, listings remain 17 percent below February 2019 levels
• Days on market averaged 70 days
• This is down from 78 days in January but slightly higher than 66 days last February

Inventory typically begins to rise as we move toward the spring buying season, but supply remains tight compared to pre-pandemic levels.

Key Economic Data Coming Next Week

• Tuesday: ADP employment data and Existing Home Sales
• Wednesday: Mortgage applications, Consumer Price Index, and 10 year Treasury auction
• Thursday: Housing Starts, Jobless Claims, and 30 year Treasury auction
• Friday: PCE inflation report, GDP second reading, and JOLTS

These reports will give markets additional clues about inflation, housing demand, and the direction of mortgage rates.

Final Takeaway

Oil prices are currently dominating market movement, pushing stocks lower and putting upward pressure on mortgage rates. While housing data shows modest home price growth and improving inventory heading into the spring season, the direction of energy prices will likely play a major role in how rates move in the near term.

For homebuyers, homeowners, and real estate professionals, market volatility like this can create both risks and opportunities. If you want help understanding how today's market conditions may impact your home purchase, refinance plans, or client strategies, reach out anytime to discuss your options.