The U.S.-Iran ceasefire brought a brief sigh of relief for homebuyers. But with sticky inflation and an unresolved Strait of Hormuz situation, economists warn the housing market’s “fog of uncertainty” is far from lifting.

The five-week streak is over — for now

After five consecutive weeks of climbing, mortgage rates finally pulled back following the announcement of a fragile U.S.-Iran ceasefire. Freddie Mac puts the average 30-year fixed rate at 6.37% this week, edging down from 6.46% the week prior. Mortgage News Daily, which tracks rates using different metrics, pegged the 30-year rate at 6.4% on April 8 — a slight dip that came one day after the ceasefire was declared.

But here’s the catch: this dip may not last. Forecasters expect March’s inflation report — released April 10 — to show inflation at 3.3%, a significant jump from February’s 2.4% reading. If that holds, any rate relief could evaporate quickly.

The spring homebuying season got off to a rough start

The war and the energy shock that followed it landed at exactly the wrong time. The housing market was showing some positive signs heading into spring — and then, as Compass Chief Economist Mike Simonsen put it, the conflict “really sapped any positive momentum we might have had early in the year.” Mortgage applications, new listings, and pending sales all slowed. New listings dropped 2.6% compared to a year ago, and the unadjusted purchase application index for the week ending April 3 was 7% below where it was twelve months earlier — the first year-over-year decline since January 2025.

Why isn’t the market recovering faster?

Even with a ceasefire in place, the housing market remains in what Lisa Sturtevant, chief economist at Bright MLS, calls “a holding pattern.” The core issue is that the Strait of Hormuz situation hasn’t been permanently resolved, which means energy and shipping costs are keeping inflation elevated — or “sticky,” in economist speak. A sustained drop in mortgage rates looks unlikely as long as inflation stays high, because the Federal Reserve has little reason to loosen monetary policy until prices cool.

There are silver linings — if you know where to look

Not everything points down. Despite slower overall activity, prospective buyers are clearly still paying attention. Zillow reported that average daily page views for for-sale listings in March were up 32% compared to a year ago — a telling sign that buyers are watching and waiting for an opening, even if they haven’t pulled the trigger yet.

Applications for adjustable-rate mortgages and FHA loans have also ticked up — lower-cost options that buyers are turning to as fixed rates stay elevated, according to the Mortgage Bankers Association.

What happens to inventory could surprise everyone

One somewhat counterintuitive possibility: inventory could actually shrink this summer rather than grow, even as demand softens. Simonsen noted that if sellers hold back and buyers slow down in tandem, overall inventory could fall behind last year’s pace. His logic cuts both ways, though — if mortgage rates keep climbing, demand slows and inventory naturally grows. The bottom line for buyers hoping for both lower rates and more homes to choose from: “You are unlikely to see both.”