The colorful Victorian houses on Hyde and Broadway streets in San Francisco’s Russian Hill neighborhood. 

California real estate was poised to pick up during what’s normally the busy spring season, but experts suggested the market could slow with significant hurdles ahead.

Mortgage rates dipped to their lowest level in three years at the end of February at just under 6%, only to tick back up to around 6.3% last week. That may seem like a minor shift, but it’s part of a “huge amount of volatility,” largely driven by the conflict in Iran that’s pushing more economic instability, Chen Zhao, the head of economics research at Redfin, told SFGATE.

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It’s led to higher gas prices, and some customers are now rethinking some home purchases. 

“Nothing affects consumer sentiment like gas prices,” Zhao said. “So people might start to feel a little bit more hesitant, and that can certainly affect the housing market.”

It won’t be clear how much these global forces will affect the housing market until months from now, when analysts can look back at the data. Still, real estate agents said it has made it more difficult to make predictions for home buyers and sellers. “It’s the craziest time I’ve ever seen,” Matt Sevenau, a Compass agent focused on Wine Country, told SFGATE. “It’s so impossible to even have any idea how this plays out.”

Don't let Google decide who you trust.

Home sales hit their lowest level in 23 months in January 2026, according to the most recent market report from the California Association of Realtors. 

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In a recent Redfin survey, 25% of Americans said they are “delaying or canceling plans for a major purchase like a home or car because of the military conflict with Iran.” The survey was conducted by Ipsos on March 5 and 6, about five days after the U.S. and Israel launched a war against Iran. The war is causing a level of concern similar to that brought by the Donald Trump administration’s institution of new tariffs in 2025. Redfin did a survey that year to gauge consumer confidence, and 24% of Americans said they were pausing purchases.

In places where inventory is especially low and the market is hot, the uncertainty is making buyers “a little more picky,” said Ilana Minkoff, a real estate agent with Vanguard Properties in San Francisco. She said luxury buyers in San Francisco, who often pay in cash, are still jumping at turnkey homes and sometimes offer far over the asking price. But given the uncertainty with prices in construction and the global supply chain, she said potential buyers aren’t as interested in fixers or homes that need renovations as they once were. 

The housing market has weathered a lot of ups and downs in recent years. Minkoff said in low inventory markets, like so much of California, it still feels like a race for buyers and sellers. “Here we are in another crisis, and the perceived value of a home is very important because that’s stability,” Minkoff said. “... In uncertain times, it is important to live in a place that you love.”

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