Pending Home Sales Log Biggest Drop in 12 Months as War, High Costs Hit Demand, Redfin Says

-- Pending home sales in the US posted the biggest drop in a year, as the Middle East conflict and high costs dampened demand, Redfin said Thursday.

Sales fell 4.1% year over year to 86,665 units in the four weeks through Sunday, according to the online real estate brokerage. Sales decreased in all but seven of the 50 biggest US metro areas, led by a roughly 18% slump in Providence, Rhode Island. San Francisco saw the largest increase of 9.6%, the report showed.

"Would-be homebuyers are backing off partly because the Iran war is causing widespread geopolitical and economic uncertainty, making some Americans wary of making a big purchase," Redfin said in a report. "It has also contributed to higher mortgage rates."

The average 30-year fixed mortgage rate reached 6.3% in the week ended Thursday, down from a six-month high two weeks earlier, Redfin said, citing Freddie Mac data. The median home-sale price was at $393,059 in the four weeks ended Sunday, up 2.3% year over year and the biggest increase in a year, according to the report.

Since the start of 2026, home-touring activity was up 11% as of Sunday, compared with a 40% jump a year earlier, Redfin said, citing ShowingTime. The brokerage said this indicates "unseasonably slow" demand among buyers.

"Luxury buyers aren't letting the high interest rates dissuade them, but for buyers on a tighter budget, the difference can be enough to kill affordability," Stacey Bryant, a Redfin Premier agent, said. "Cost-conscious buyers are also jittery about the rising prices of other things -- like gas, food and energy -- cutting into their budgets."

Energy prices have surged following the US-Israel war with Iran that started at the end of February, with the crucial Strait of Hormuz effectively closed. The White House is optimistic about reaching a deal with Iran, noting that a potential second round of talks would likely be held in Pakistan. Meanwhile, a two-week ceasefire between Washington and Tehran still holds.

"Mortgage rates may swing up or down in the next few weeks, depending on the direction of the Iran war, the outcome of negotiation talks and oil prices," Redfin said.