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The U.S. bombing of nuclear sites in Iran that quickly sent the country to the brink of another broad conflict in the Middle East has added one more issue for those mired in a sluggish real estate market to worry about.
Of course real estate professionals never count on world conflicts to influence their bottom line, and war is a tragedy first and foremost for those directly in harm’s way. But the situation in Iran has the potential to ripple through global economies — impacting, among many others, real estate professionals and the people they serve.
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With that in mind, we sought to make sense of what happens to housing when conflict breaks out, as well as what has happened to home sales historically during times of war involving — directly or indirectly — the U.S.
The result of this effort suggests that so far, economists haven’t seen responses in the relevant markets that might further hurt home sales.
Matthew Gardner | Gardner Economics
“Right now there is caution,” Matthew Gardner, an economist with Gardner Economics, said. “But we haven’t seen any kind of panic, whatsoever.”
Those signs of panic would likely first appear in oil, stocks and bonds.
In this case, economists have quickly turned their attention to the conflict’s impact on oil prices.
Oil is a direct and indirect source of inflation in the economy, so a conflict that leads to even the threat of Iran closing the Strait of Hormuz, a choke point in the Persian Gulf where roughly 20 percent of the world’s oil supply flows, was thought to send oil prices higher. The possibility that Iran would close the strait has been widely discussed during the conflict.
“That could have led the Fed to delay cutting rates even longer, and potentially you could see mortgage rates spiking,” Gardner said. “But that one thing didn’t happen.”
If oil prices rise, it could push up the consumer price index, making it even less likely for the Federal Reserve to cut the federal funds rate, which has an indirect effect on mortgage rates.
Instead, oil futures fell during the first hours of trading after the U.S. strikes on Iran and were down 8.6 percent as of mid-day Tuesday.
Oil prices as of mid-day on Tuesday, June 24, 2025
Economists next watch for volatility in equity markets. Had there been a sell-off in the stock market that drove down share values, investors and other potential homebuyers may have had less wealth with which to buy a home, Gardner said. That could have had an even bigger impact on the luxury market.
“But we didn’t see that,” Gardner said. “So far, so good.”
The third thing Gardner said he’s keeping an eye on is whether there are indications that global investors are moving money into the U.S. via real estate or the bond market.
“You could actually see money coming in, potentially, to the U.S. because it’s considered to be a global safe haven. Also it’s the global currency,” Gardner said. “That has the potential to actually lower mortgage rates.”
War, peace and interest rates
Inman analyzed the data for existing single-family home sales dating back to January 1965 to try and understand the impact of war involving the U.S. and the housing market.
And while there are some trends in home sales that appear to generally track global conflicts, they also appear to more closely track the 30-year fixed rate, federal funds rate and 10-year treasury yield.
While this is not a comprehensive analysis of all factors — for instance, recessions and mortgage rates — it does paint an interesting picture.
The graph above shows that decades ago, home sales fell sharply as the Federal Reserve quickly raised the federal funds rate to combat quickly rising inflation. That happened to coincide with the Iran-Iraq War, when home sales fell before beginning to climb in mid-1982.
Operation Desert Shield began Aug. 2, 1990. The following day, mortgage rates were 9.84 percent. Rates jumped to 10.29 percent within three weeks and remained above 10 percent for much of the operation before beginning a long descent.
Home sales followed suit, with a sharp — and brief — decline and then rebound.
10-year Treasury Yield, the federal funds and 30-year fixed mortgage rates. FRED
In the case of Operation Desert Storm, which lasted for about six weeks in early 1991, rates fell.
Later, sales dipped sharply following the September 11 attack on the World Trade Center and invasion of Afghanistan before continuing a climb during the early years of the U.S. war with Iraq.
Sales continued to climb toward the apex of the housing bubble that burst in September 2005, preceding through the Great Recession.
The takeaway is that home sales more closely track things like mortgage rates than wars, though there are conditions caused by war that can impact rates and sales.
And while the Federal Reserve is currently walking a tight rope between taming inflation and keeping rates high for so long it causes a recession, Gardner said it wasn’t a recession specifically that had economists worried about the housing market.
“Some could argue that if it becomes bigger,” Gardner said, “and involves more of the Gulf states, we could see more of an economic global slowdown.”
Data editor Daniel Houston contributed to this story.
