This week interest rates rose further and stocks dropped as investors grew more cautious of the lasting financial repercussions of the conflict in Iran. As the war drags on investors feel that it may last longer than originally believed and oil prices which were about $70 a barrel just a few weeks ago have now spiked to about $120 a barrel. Some experts said it could reach $200 a barrel. The impact of this could reignite inflation which has finally reached acceptable levels. The Fed had a meeting this week and left interest rates unchanged. They are in a tough spot. Clearly with 70% of the economy fueled by consumer spending higher gas and energy prices will cut into spending for other nonessentials. At the same time hiring has stalled. The Fed has a duel mandate. To keep inflation at their 2% target level and to maintain maximum employment. Usually when the unemployment rate rises consumers stop spending and inflation drops but when other factors come into play like the current spike in energy prices inflation can rise while unemployment rises. They called it stagflation in the late 1970’s. This puts the Fed in a tough spot.
On the bright side, the real estate market has picked up drastically from the fourth quarter of 2025. We have seen home prices begin to rise after falling in the second half of 2025. For example the median price of a home in California went from an all-time high of $910,200 in April 2025 to a 23-month low of $823,120 in January 2026. It rose month-over-month in February to $830,370, its first monthly rise since its April peak. Inventory levels are lower and we are seeing brisk activity. Even the condominium market, which has slowed more than the single family market is quite active. This drop in prices combined with lower interest rates had affordability at a 3-year high which makes the uptick in activity make sense along with this being the prime selling season. Fortunately, interest rates going from about 5.875%, the lowest since 2022, to 6.5%, the highest in a year, over the last three weeks has not lowered demand so far.
Mortgage rates – Every Thursday, Freddie Mac publishes interest rates based on a survey of mortgage lenders throughout the week. The Freddie Mac Primary Mortgage Survey reported that mortgage rates for the most popular loan products as of March 19, 2026, were as follows: The 30-year fixed mortgage rate was 6.22%, up from 6.11% last week. The 15-year fixed was 5.54%, up from 5.5% last week.
The graph below shows the trajectory of mortgage rates over the past year.
Stock markets – The Dow Jones Industrial Average closed the week at 45,577.47, down 2.1% from 46,558.47 last week. It is down 5.2% year-to-date from 48,063.29 on December 31, 2025. The S&P 500 closed the week at 6,506.48, down 1.9% from 6,632.19 last week. The S&P is down 5% year-to-date from 6,845.50 on December 31, 2025. The Nasdaq closed the week at 21,647.61, down 2.1% from 22,105.36 last week. It is down 6.9% year-to-date from 23,241.99 on December 31, 2025.
U.S. Treasury Bonds – The 10-year treasury bond closed the week yielding 4.39%, up from 4.28% last week. The 30-year treasury bond yield ended the week at 4.96%, up from 4.90% last week. We watch bond yields because mortgage rates follow bond yields.
California existing-home sales – The California Association of Realtors reported that existing-home sales totaled 274,820 on an adjusted annualized basis in February, up 7% from 256,550 annualized sales in January and down 0.3% from 275,600 last February. The statewide median price paid for a home in was in $830,370 in February, up 0.9% from $823.180 in January. That marked the first month-over-month increase since last May and a welcome relief from January when the median price reached a 23-month low. Year-over-year February’s median price was down 1.9% from $839,130 one year ago. There were fewer listings in February. The unsold inventory index dropped to a 4.0-month supply of homes for sale in February, down from 4.4-months in January.
The graph below shows CAR sales data by county for Southern California.
Have a Great Weekend!
