LOS ANGELES REAL ESTATE REPORT

The LARE Report

Last Update: March 08, 2026

Rising Oil Prices and Geopolitical Tensions Push Mortgage Rates Higher

A quick note from us

This week, the conflict with Iran has dominated market dynamics, driving oil prices sharply higher and raising concerns about future inflation. These inflationary pressures have contributed to an increase in mortgage rates, despite the usual flight-to-safety demand for bonds during geopolitical turmoil. The labor market showed unexpected weakness with a loss of 92,000 jobs in February and a slight uptick in unemployment, influenced by a major healthcare strike and severe winter weather. However, manufacturing and services sectors expanded more than anticipated, suggesting resilience in parts of the economy. Retail sales declined modestly, indicating cautious consumer behavior. As we monitor upcoming inflation reports and housing data, the interplay of geopolitical risks and economic indicators will continue to shape mortgage market conditions.

What this means for buyers: Buyers should anticipate higher mortgage rates in the near term due to inflation concerns linked to rising oil prices and geopolitical tensions. While economic data shows mixed signals, the increase in rates may affect affordability, making it important to act decisively and consider locking in rates sooner rather than later.

What this means for sellers: Sellers may face a market with slightly reduced buyer demand as mortgage rates rise, but strong sector expansions and wage growth could support steady interest in well-priced properties. Pricing strategies should reflect the evolving rate environment and economic uncertainties to attract qualified buyers.

Geopolitical Impact on Mortgage Rates

The conflict with Iran has created a complex environment for mortgage rates. Typically, geopolitical risk drives investors toward bonds, lowering rates. However, the surge in oil prices has heightened inflation expectations, pushing rates upward. Additionally, potential increases in military spending and government bond issuance may further elevate yields.

What this means for buyers: Buyers should prepare for continued volatility in mortgage rates as geopolitical risks persist, potentially increasing borrowing costs.

What this means for sellers: Sellers should be aware that rate fluctuations may influence buyer urgency and financing capabilities, impacting market activity.

Labor Market Weakness Amid Economic Resilience

February's labor report showed a loss of 92,000 jobs and a rise in unemployment to 4.4%, influenced by a healthcare strike and harsh weather. Despite this, wage growth remained steady at 3.8% annually. Meanwhile, manufacturing and services sectors expanded beyond expectations, signaling pockets of economic strength.

What this means for buyers: Buyers may find some relief in slower job growth, but should remain cautious as wage growth and sector expansions suggest ongoing economic activity that supports housing demand.

What this means for sellers: Sellers can leverage the underlying economic resilience to justify pricing, even as labor market softness tempers overall market enthusiasm.

Consumer Spending and Retail Sales Trends

Retail sales fell 0.3% in January, reflecting cautious consumer spending amid economic uncertainties. This slight decline aligns with the broader mixed economic signals and may influence housing market dynamics as consumer confidence adjusts.

What this means for buyers: Buyers should consider the impact of consumer spending trends on overall economic health and housing affordability.

What this means for sellers: Sellers should monitor consumer sentiment as it can affect buyer confidence and transaction velocity.

Upcoming Economic Data to Watch

Key reports on inflation, including the Consumer Price Index and the Fed-favored PCE price index, are scheduled for release this week, alongside Existing Home Sales data. These reports will provide critical insights into inflation trends and housing market conditions amid ongoing geopolitical and economic developments.

What this means for buyers: Buyers should stay informed on inflation data as it will influence mortgage rates and purchasing power.

What this means for sellers: Sellers should use upcoming data to adjust pricing and marketing strategies in response to evolving market conditions.

Closing Remarks

Every buyer and seller enters the market with different priorities. For some, it is achieving the strongest possible price. For others, it is timing, certainty, or aligning the sale of one property with the purchase of another. In a market where mortgage rates are adjusting, inflation remains elevated, and economic growth is slowing, strategy matters more than ever. The way a property is priced, negotiated, and managed from contract to closing can directly influence both your financial outcome and your timeline. The difference between a disciplined plan and a reactive one can equate to tens, and in some cases hundreds, of thousands of dollars. If you would like clarity on your home’s value in today’s rate environment, or a thoughtful plan for what you can confidently purchase as conditions evolve, we would welcome the conversation.

Jack Misraje

323-209-5225

Karen Misraje

310-488-1030