{"id":84517,"date":"2026-03-23T12:43:18","date_gmt":"2026-03-23T19:43:18","guid":{"rendered":"https:\/\/www.redfin.com\/news\/?p=84517"},"modified":"2026-03-23T12:43:18","modified_gmt":"2026-03-23T19:43:18","slug":"weekly-economic-update-march-23-2026","status":"publish","type":"post","link":"https:\/\/www.redfin.com\/news\/weekly-economic-update-march-23-2026\/","title":{"rendered":"Redfin Economists\u2019 Weekly Take: Iran War Drives Rate Volatility"},"content":{"rendered":"

This Week In A Nutshell: <\/b>The Iran War continues to fuel market volatility as it enters its <\/span>fourth week<\/span><\/a>, particularly as the White House signals it is seeking a resolution.<\/span><\/p>\n

Upcoming Attractions<\/b><\/h3>\n

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This week will feature many speaking engagements from various Fed officials, but key economic data releases will be scarce. The primary focus for markets will continue to be on the situation in the Middle East, specifically the timeline for resuming oil shipments from the Persian Gulf. Rates may also come down this week if Fed officials, in their speeches and interviews, attempt to change the rather<\/span> hawkish<\/span><\/a> impression left after last week\u2019s press conference with Fed Chair Powell.<\/span><\/p>\n

Last Week\u2019s Highlights<\/b><\/h3>\n

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Last week, daily average mortgage rates <\/span>jumped<\/span><\/a> from 6.36% to <\/span>6.53%<\/span><\/a> as 10-year Treasury yields increased from 4.22% to 4.39%. Much of the movement came late in the week, starting with the <\/span>Fed\u2019s Wednesday conference<\/span><\/a>. Rate movement <\/span>intensified<\/span><\/a> on Friday after President Trump said the U.S. was sending thousands of Marines to the Middle East. The Fed press conference nudged rates higher as Fed officials were seen as setting a high bar for any rate cuts this year. By Friday, the fed funds futures market was pricing in 5 to 10 bps of rate <\/span>hikes<\/span><\/i> in 2026, and no rate cuts until late into 2027. On February 27, when mortgage rates briefly touched 5.99%, investors were pricing in 60 bps of rate cuts this year. Sentiment has swung very dramatically in the last four weeks.<\/span><\/p>\n

Diving a Little Deeper<\/b><\/h3>\n

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The main question on everyone\u2019s mind in housing: Will mortgage rates keep going up, or will they come back down to the lows we saw in late February? There are many layers of uncertainty, including the duration of the Iran war and how the economy reacts, along with the Fed\u2019s response to changing economic conditions and the market\u2019s forecasts for Fed policy.<\/span><\/p>\n

Economists widely expect that these oil price spikes<\/span> won\u2019t<\/span><\/i> lead to more restrictive Fed policy. Economists believe the Fed will be more worried about the risk of labor market deterioration than inflation with higher gas prices. However, investors interpreted Fed Chair Jerome Powell\u2019s statements last week to mean the Fed is unlikely to cut interest rates this year, particularly his remarks about needing to see an improvement in inflation. Indeed, markets are now pricing in a 20% chance of a rate hike this year, and 0% chance of a rate cut.<\/span><\/p>\n

It is definitely possible markets have overshot their expectations for the Fed, meaning rates are much higher right now than they need to be. To that point, Chair Powell actually downplayed the risk of a hike last Wednesday even while cautioning that the timing of the next cut is uncertain. The bar for the Fed to hike rates for the first time since July 2023 is high, and we\u2019re unlikely to hit it given general macroeconomic conditions.<\/span><\/p>\n

But whether markets have swung too far doesn\u2019t matter for the housing market.<\/b> Mortgage rates are high, and that is what consumers are experiencing. The housing market was already fragile to start the year, despite improving affordability. Housing demand was already underperforming where mortgage rates were because of lingering lock-in effects and labor market weakness. And this current bout of volatility couldn\u2019t have come at a worse time. Much like last year\u2019s Liberation Day, the war threatens to derail the start of the spring homebuying season.<\/span><\/p>\n

Redfin Housing Market Reports<\/b><\/h3>\n

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The Top 20% of Earners Hold Nearly 60% of America\u2019s Real Estate Wealth<\/b><\/a><\/p>\n