The conflict in Iran is adding fresh pressure on an already strained U.S. housing market, with rising costs and economic uncertainty weighing on both homebuyers and builders.
During the traditionally busy spring selling season, demand appears to be weakening as high home prices and mortgage rates keep many prospective buyers on the sidelines.
Existing home sales fell 3.6% in March to a seasonally adjusted annual rate of 3.98 million, the lowest level since June 2025, while the median price remained elevated at about $408,000.
Surveys underscore the softening outlook. Only about 25% of non-homeowners expect to buy a home within five years, the lowest level recorded by Gallup .
Data from Redfin show pending home sales dropped 4.1% year-over-year in the four weeks ending April 12, marking the steepest decline in more than a year. Realtors say buyer activity, including home tours, has also slowed compared with last spring.
The weakness suggests a broader cooling in demand rather than a one-month dip.
At the same time, builders are facing mounting cost pressures as oil prices rise amid the Iran conflict, increasing expenses for transportation and construction materials.
The National Association of Home Builders said builder confidence fell four points to 34 in April, the lowest level since September, reflecting growing concern across the industry.
Even as demand softens, affordability remains a key challenge. Builders looking to cut prices are constrained by higher input costs, limiting their ability to offer relief to buyers.
Elevated interest rates, rising energy prices, inflation and construction costs are likely to keep the housing market subdued in the near term, analysts say.