America’s real estate market was all set for a hot selling season. Those hopes have been dashed.

Real estate requires a certain degree of blind optimism: a belief that, despite the market’s ups and downs, the buyers will come knocking, the home inspection will come up clean, and both parties will shake off the jitters and sign on the dotted line. Never does that faith flow more freely than in the weeks leading up to the busy spring selling season in March and April, when better weather tends to coax buyers and sellers out of hibernation and into a flurry of dealmaking that sets the tone for the rest of the year.

In the past few years, this eternal optimism has not been rewarded. Most recently, President Donald Trump’s sweeping tariffs spoiled hopes of a spring rebound in 2025. With would-be buyers feeling uneasy about borrowing rates, the economy, and their jobs, many decided to stay put. Not to be discouraged, real estate buyers and sellers came into 2026 daring to dream again. Mortgage rates had drifted lower, and home prices were easing in much of the country, sweetening the math for buyers. The labor market wasn’t roaring, but it was holding up. Plus, the thinking went, buyers could only put off big life changes for so long. Eventually, people had to get moving again. Maybe 2026 was finally the year.

For the second year in a row, sellers, agents, and analysts are mourning a spring bump that failed to materialize. And once again, they’re pointing the finger at geopolitical turmoil: this time, it’s the war in Iran, which sent borrowing rates skyward and made everyday items, notably gas, more expensive. The conflict has weighed on both consumers’ finances and their psyches — if there’s one thing homebuyers hate to hear before the biggest purchase of their lives, it’s “uncertainty.” To top it all off, the war began just as sellers would typically start planting for-sale signs in their thawing front yards.

Real estate agents, ever the optimists, aren’t ready to throw in the towel quite yet. They’re holding out hope that things could still turn around in time for the peak of the selling season in June. And of course, people always have to move for life reasons, regardless of the macroeconomic morass. The upside for buyers is that they have more leverage than in recent years — that may be enough to convince some to go bargain-hunting, perhaps at one of the many new-home communities where builders are offering big perks to keep sales moving. Rate buydowns and finger-crossing can only go so far, though. It’ll take a lot more than wishful thinking to jolt the housing market back to life.

The housing recovery was on shaky ground even before the US entered another war in the Middle East. Affordability had improved, sure, but not enough to incite a mad dash to open houses. Still, there were good reasons for optimism. The biggest bright spot was the typical mortgage rate, which in late February slipped below 6% for the first time since 2022. It was a vast improvement from a year earlier, when rates were hovering near 7% — a single percentage-point drop can reduce homebuyers’ monthly payments by hundreds of dollars. Nationally, wages were growing faster than home prices. The job market was weird, but not terrible. Despite companies not hiring much, the unemployment rate remained relatively low at 4.3%. All of this suggested friendlier waters for homebuyers.

Some economists predicted a rip-roaring market in 2026 — the National Association of Realtors, for instance, forecast existing-home sales to jump by a whopping 14% this year (if this had indeed come to pass, I think you might have caught your friendly local Realtor turning cartwheels in the street). Most took a more measured, but still upbeat, approach. Zillow, for instance, expected to see 4.26 million existing-home sales this year, a modest 4.3% increase from last year — more of a thaw than a heat wave. Mike Simonsen, chief economist at the brokerage firm Compass International Holdings, forecast a pickup of between 4.25% and 5%.

Even the more guarded forecasts are now being revised down, showing how much has gone wrong for buyers and sellers this spring. The typical rate for a 30-year loan jumped to nearly 6.5% in early April, per Freddie Mac, though it recently slipped lower to around 6.25%.

Consumers are still spending, but they’re getting slammed at the gas pump and feeling rotten about the economy. It’s also hard to feel secure in your job when the bosses keep talking about AI-driven “efficiencies” and sending out layoff notices in all-lowercase corporatespeak.

Buyers began the year with plenty of options on the market, which meant they could take their time and see how things shake out. Active inventory was up about 5.44% in January compared with the same month in 2025 and 32% higher than the same point in 2023, Redfin data shows.

Simonsen, the chief economist at Compass, sees signs that this trend is shifting — in May, he says, the number of homes for sale may actually be slightly lower than at the same point last year. The big reason is that many would-be sellers are also playing the waiting game. People aren’t moving for new jobs, and the low unemployment rate also means fewer people are forced to sell their homes after a layoff or financial disaster. Plus, homeowners are largely in no rush to give up their plum mortgage rates.

“Really, it looks like these are sellers who are perfectly happy to wait,” Simonsen says “They just don’t have to sell.” “Buyers are kind of like, ‘If I wait, I’ll probably get it cheaper,’

The recipe for a turnaround is pretty simple: a swift end to the war in Iran, steady job growth, and stability in the mortgage market. Interest rates and jobs.