Reversing a sharper-than-seasonal pullback in January, the annual pace of existing-home sales rose 1.7% over the month in February but ultimately landed 1.4% lower than the pace of sales a year ago, according to newly released data from the National Association of Realtors (NAR).

At $398,000, the median existing-home price was just 0.3% higher year over year, the group reported Tuesday in its latest monthly analysis of home sales activity.

While housing affordability is improving “and consumers are responding,” noted NAR Chief Economist Lawrence Yun in a statement, “there is a long way to go to return to pre-pandemic levels of transaction activity.”

“There are more than 6 million more jobs than in 2019, yet home sales per year are down by 1 million,” Yun added. “Despite the modest gain in home sales, actual housing demand remains muted relative to wage growth and job gains. Inventory is growing, but sluggishly.”

The downbeat outlook from Yun was reinforced by a team of economists at Wells Fargo, who said on Tuesday that the laggard pace of 4.09 million units in February — slightly faster than overall existing-home sales of 4.07 million in 2025, per Mortgage Bankers Association (MBA) data — matched their baseline forecast for 2026.

“Harsh winter weather likely suppressed sales during both months, each of which remained notably below the trend at the end of 2025,” the Wells Fargo economists wrote. “A drop in mortgage applications for purchase during February suggests resales will remain muted in the months ahead.”

Such forecasts now must account for the widening war with Iran, which the U.S. started on Feb. 28, and the corresponding global energy shock of unknown severity or duration.

Feet of snow that blanketed much of the country in January has been widely cited as a driver of slow homebuying activity that month. But those disruptions may pale in comparison to those wrought by a prolonged energy crisis stemming from military engagement in the Middle East.

Limitations of slow purchase demand

Mortgage rate-lock data from February provisionally supports Wells Fargo’s call for a muted sales pace in the months ahead “on account of adverse affordability conditions.” Existing-home sales improved across the South, West and Midwest on a monthly basis in February while declining in the Northeast.

Market intelligence platforms ICE Mortgage Technology and Optimal Blue separately reported modest rebounds in purchase lock activity that was 5% higher over the year last month, as falling mortgage rates helped homebuyer affordability reach its most improved level in four years.

Optimal Blue says February purchase locks were 14% higher than January, though affordability pressures remain dominant hurdles to boosting organic homebuying demand, and the rate environment has proven more supportive of refinance activity.

MBA data shows purchase mortgage application activity closed out the last week of February at a pace roughly 10% ahead of the same week last year, supporting what the association’s economists described as consistent if not extraordinary activity.

Economists at Realtor.com have separately reported how “structural frictions” related to mortgage rate lock-in effects remain well entrenched in 2026, limiting overall sales transactions. In this environment, more purchase activity is being driven by buyers who need to move for family, work or financial reasons rather than elective buyers.

With more than half of outstanding first-lien mortgages carrying mortgage rates below 4% in February, according to Realtor.com, average mortgages rates are back above 6% in fewer than two weeks of fighting between the U.S. and Iran, reflecting souring economic outlooks for the year amid newly rising inflation and geopolitical risks.

How the regional war in the Middle East will have reshaped global financial conditions six or 12 months from now is an open question. Nevertheless, U.S. monetary policy from the Federal Reserve must now consider the ramifications of a potentially prolonged global energy supply shock.

“The outlook for the spring homebuying season has become cloudier than it was even just a month ago,” said Lisa Sturtevant, chief economist at multiple-listing service Bright MLS, sharing her reaction to NAR’s existing-home sales report with Scotsman Guide.

“Despite mortgage rates falling below 6% briefly, international conflict has sent them higher in recent days,” she added. “If the conflict with Iran is limited, the housing market could rebound quickly. However, a prolonged conflict could stall home sales activity this spring.”

Slow demand meets rising uncertainty

The dip in February existing-home sales follows a soft reading on January pending home sales, which that forward-looking measure of sales contract activity foreshadowed. Buyers may be facing lower borrowing costs, but plateauing home-price gains belie the reality that home price-to-income ratios remain historically wide.

With sellers commanding pricing premiums in competitive Midwestern and Northeastern markets but selling for less than asking price across many Southern and Western metros, homebuyers have seen limited new inventory as the share of relistings — homes that were delisted last year and are now back on the market — steadily rises.

Without a pickup in inventory, rising demand this spring and summer could simply fuel further price gains, cautions Yun.

“That is why increasing supply is so important to help limit home price growth, improve housing affordability and boost transactions,” the NAR economist explained. These pressures are once again weighing on purchase activity in the runup to the year’s typically busiest months for homebuying in the spring and summer.

A war with Iran at the beginning of March will likely be an inflection point when looking back on 2026 homebuying activity if it ultimately erodes housing affordability, increases household costs or otherwise raises economic uncertainty to levels that postpone big consumer purchases.

Following a strong month of concentrated job gains in health and social services sectors, job markets showed an added degree of weakness in February, with the government reporting last week that employers shed 92,000 jobs last month across a range of sectors.

Marc Halpern, CEO of Foundation Mortgage, struck a cautiously optimistic tone in a reaction he shared by email with Scotsman Guide, noting that some sellers have delisted amid geopolitical escalations.

“When consumers are uncertain about their job security or the impact of international conflict on their wages, they often pull back from the market entirely,” said Halpern. “We are expecting to see inventory pick up in the next few months as spring is traditionally a good time to buy.”