Rising mortgage rates hit U.S. — but Houston has a buffer
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Mortgage rates are inching up as tensions escalate in Iran — but Houston's housing market is better positioned than most to absorb the shock.
Why it matters: While national headlines tie rising rates to geopolitical instability, Houston's economy has an energy sector and general affordability buffer that could keep homebuying relatively steady.
- "I don't think this conflict … has impacted our housing market one iota," Ted Jones, real estate economist with the Houston Association of Realtors, tells Axios.
- That's because Houston tends to benefit when oil prices rise.
The big picture: Mortgage rates have crept up slightly since the Iran conflict began — but not dramatically.
- The average 30-year mortgage rate climbed to 6.43% in late March from 6.3%, while applications fell 10.5%, per the Mortgage Bankers Association.
Yes, but: Rates are still hovering in what is considered a historically normal range of roughly 6% to 8%, Jones says.
Zoom in: Though Houston's economy is not as reliant on the energy industry as it once was, it still has deep ties, which "buffers the Houston economy," per Jones.
- The city is home to giants like Exxon and Chevron and a dense network of energy firms. When conflict pushes oil prices higher, those companies ramp up drilling and spending — and much of that work flows through Houston.
- That translates to more well-paying jobs and more households that feel secure enough to buy rather than rent — helping insulate Houston's housing market from the full force of higher mortgage rates.
What they're saying: "When oil prices go up, that means we're going to drill more, and we're going to go through many Houston firms that are involved in that, and they're going to grow and they're going to hire more people, and they're going to buy more houses," Jones tells Axios.
The intrigue: Houston's relative affordability gives it a cushion, too, unlike other markets, including Austin, that may feel rate pressure more acutely.
- Home prices there surged faster, cutting into affordability. It takes more than eight years to save for a typical down payment there, versus three and a half years here.
- Houston's more moderate price growth and larger housing supply give buyers more breathing room.
Between the lines: Wars don't move the U.S. housing market the way they once did.
- Unlike World War II — when widespread labor shortages and strict material rationing effectively froze homebuilding — modern conflicts directly touch a far smaller share of Americans, per Jones.
Reality check: Higher oil prices can still strain buyers. Rising gas costs can squeeze household budgets, especially for commuters.