Weekend Talking Points – ‘Not Over Yet’

The US/Iran war continues, but the stock and bond markets are increasingly behaving as if it’s already over, with the S&P 500 stock market index now above its pre-war levels and average 30-yr mortgage rates slowly returning to the low 6% range.

Before we begin. On February 27, average 30-year mortgage rates were reported at 5.99% by Mortgage News Daily. The US/Iran conflict started on February 28. These dates are important because: 1) oil prices, US treasury yields, and mortgage rates moved up dramatically in March, and 2) the decline in existing home sales, Realtor/LO confidence & builder sentiment in March & April reflects that.

Existing home sales fall as rates rise. In March, existing home sales dropped 3.6% month-over-month to 3.98 million units (SAAR), while median home prices rose 2.7% MoM to $409K. [NAR]

TP: It’s disappointing to be back below 4 million units (SAAR), especially during a time when transaction volumes should be ramping up. But the drop was also quite predictable, with mortgage rates rising 60+ basis points over the course of March.

Realtors Confidence Index for March. Competition levels increased seasonally, with more homes selling faster (and above list price). But things are clearly cooler than they were in March 2025. A lot more on this later. [NAR]

Wholesale inflation (PPI) was surprisingly tame. Headline PPI rose 0.5% MoM in March (high, but well below expectations of +1.1% MoM) and core PPI (which exclude food & fuel) was up just 0.1% MoM. [BLS]

TP: The monthly growth in March PPI was much better than feared, but wholesale inflation on a year-on-year basis continues to rise, hitting 4.0% YoY on a headline basis and 3.6% YoY for core. Eventually, PPI (producer inflation) feeds into CPI (consumer inflation).

ADP: Weekly jobs growth on an uptrend. For most of the last 6 months, ADP has reported average weekly private jobs growth that was either negative or barely positive. But that changed in March, with a clear uptick in net hiring. The latest figure — for the four weeks ended March 28 — was an average of +39,250 jobs per week, or a current monthly pace of 157,000. That’s actually quite similar to the BLS March jobs number (which includes government jobs) of +178,000.

TP: It’s hard to know what to make of this recent increase. Even ADP has struggled to explain its origins. In any case, ADP’s March Monthly Employment Report is likely to show a much smaller monthly number (perhaps 50,000–70,000) given the timing of data collection.

Higher oil prices (and mortgage rates) torpedoed builder confidence. The National Association of Homebuilders’ Housing Market Index dropped 4 points to 38, its lowest level since September 2025. Why are builders so bummed out? Here’s what NAHB Chairman Bill Owens had to say:

“Builder sentiment has fallen back in spring as buyers face ongoing elevated interest rates and growing economic uncertainty. The year started with hopes for housing momentum growth, but risks with respect to the Iran war, energy costs, and declines for consumer confidence have slowed the market.”

Realtor’s Confidence Index for March 2026

Every month, the NAR surveys Realtors and asks them for a combination of hard and soft data. The results of this Realtors Confidence Index (“RCI”) are released on the same day as the existing home sales figure. I consider it a very useful gauge of competitive ferocity.

Q: How Optimistic are Realtors in the Near Future?
A: A good deal less than they were before the US/Israel war with Iran (and sharply higher mortgage rates). In February 2026, 37% of RCI respondents expected a year-over-year increase in buyer traffic over the next 3 months. That plunged to 26% in March 2026. Similarly in February 2026, 31% of respondents expected a YoY increase in seller traffic over the next 3 months. That dropped to 27% in March 2026.

Competition and Pace of Sales
In March 2026, the median Days on Market (DOM) dropped 6 points month-over-month to 41. But this kind of drop happens pretty much every March, as the pace of sales begins to pick up in Spring. Notably, March 2026 is still 5 days slower than in March 2025 (36).

Similarly, the % of Properties Sold Above List Price increased in March to 18% (from 14% in February). Again, that’s normal for this time of year. But it’s also a smaller share than the 21% in March 2025. And it’s much lower than the 40–60% figures we saw during the pandemic-era housing boom.

Need even more evidence of a spring warm-up that’s cooler than last year? The average Number of Offers per Sale was roughly flat MoM at 2.2. In March 2025, that figure was 2.4. And the % of Sales that Waived the Inspection Contingency was 18% in March 2026, compared to 22% in March 2025.

Composition of Sales
In March 2026, the % Share of First-Time Buyers dropped to 32% (from 34% in February). This was the same amount in March 2025. While this often moves in the opposite direction, the % Share of All-Cash Sales also dropped (from 31% in February to 27% in March 2026).

Bond and Mortgage Market

Since peaking around 6.65% on March 27, average 30-year mortgage rates have been trending lower. The US stock market is behaving as if the war in Iran is already over, and US treasury yields are well below their highs. A second round of talks between the combatants is apparently being planned for next week, but anything (or nothing) could happen. The Fed is expected to do nothing at its April 29 meeting.

Note: The Fed Funds Rate policy range is currently 3.50–3.75%. The probabilities below come from the CME Group website and are implied from the Fed Funds Rate futures market.

• April 29 FOMC Meeting: 98% probability that the Fed Funds Rate target range is kept at 3.50–3.75% (unchanged from last week). And…a 2% probability that the Fed will raise rates 25 basis points.
• June 17 FOMC Meeting: 98% probability that the Fed Funds Rate will be kept at 3.50–3.75% (was 94% last week). And again, a 2% probability that rates will be 25 basis points higher than current.
• No rate cut in 2026? If I look way out to the last FOMC meeting of the year (Dec 9), the market is pricing in a 65% probability (was 73% last week) that the Fed Funds Rate will be exactly where it is today. In other words, the market continues to price in NO rate cuts for the entirety of 2026. There is a 29% probability that rates will be 25 basis points below current (just one rate cut before year-end), and a 5% probability that they will be 50 basis points below current (two rate cuts before year-end).

They Said It

“With oil prices higher in the U.S., 62% of builders reported suppliers have increased building material costs due to higher fuel prices, including gas and diesel. Energy costs make up approximately 4% of residential construction material input and service costs. With near-term economic risks elevated, 70% of builders reported challenges pricing homes given uncertainty about material costs.” — Robert Dietz, NAHB’s Chief Economist

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