Gas Prices Surge to $4 a Gallon, Straining Household Budgets Amid Spring Housing Season

Gas prices have shot above $4 a gallon as the Iran war sends global oil prices soaring, increasing budget strain for prospective homebuyers in the heart of the spring housing season.

The national average price of a gallon of regular gas hit $4.02 on Tuesday, according to AAA. It marked the first time since summer 2022 that gas crossed above the $4 threshold.

Meanwhile, the stock market rallied Tuesday amid unconfirmed reports that President Donald Trump was eyeing an end to the war. The Dow and S&P 500, however, were still on track for their worst month since September.

In another mixed signal, the Conference Board's Consumer Confidence survey showed that despite an oil price shock from the war, consumer outlook on the economy actually increased slightly in March.

Altogether, these developments present a mixed bag of indicators for the crucial spring housing season, which has come under threat as mortgage rates surged in recent weeks in direct response to rising oil prices.

"The optimistic view for the spring housing market is that people jump on this moment when mortgage rates are still below last year's levels and spring home sales exceed the low bar from the past three years," says Realtor.com® senior economist Joel Berner. "There is certainly a case to be made for this, as the market as it can be seen currently is in buyers' favor."

Berner notes that positive signs for buyers include rising inventory, softer home prices, and mortgage rates that remain below year-ago levels despite the recent uptick.

On the other hand, if the war continues to drag out and oil prices remain elevated, concerns about inflation and the rising cost of living could weigh heavily on homebuyer sentiment, the economist says.

"If the cost of everything else is also going up, people probably don't want to add to their monthly housing costs too," says Berner. "If this is the prevailing sentiment, we could see another lackluster spring selling season."

One year ago, hopes for a strong spring housing market were dashed by rising mortgage rates and economic turmoil from Trump's early April tariff announcement, which sparked fears of a recession.

This year, the outlook for housing and the economy largely depends on the duration of the war in Iran, which is keeping oil prices elevated and driving fears of renewed inflation.

"If it drags on for a long time, the housing market will suffer," says Berner.

Trump's plans for the war remain a matter of intense speculation. On Tuesday, the stock market rallied following a Wall Street Journal report that Trump had told aides he was willing to end the war even if the Strait of Hormuz remained largely shut to commercial shipping.

Trump later told the New York Post that he believes the Iran war will likely end soon, saying other nations will ultimately be responsible for reopening the strait, a key passage for 20% of global crude oil shipments.

Still, the outlook remains unclear, with no firm U.S. timeline for concluding the war, and Iranian officials remaining insistent that they are not engaged in negotiation.

As well, multiple media reports citing U.S. officials indicate that a buildup of American troops continues in the Middle East, with soldiers from the elite 82nd Airborne division arriving in the region this week.

That has led to speculation that the conflict could escalate into a ground war imminently, although the buildup could also be a pressure tactic from Trump to force Tehran into a settlement.