The Iran war raises the housing market for the year. Here’s what real estate agents see

A version of this article originally appeared on CNBC Property Play by Diana Olick. Property Play offers new and developing opportunities for real estate investors, from individuals to corporate investors, private equity funds, family offices, institutional investors and large public companies. Register to receive future publications, directly to your inbox.

The most important housing market of the year is underway, but expectations are being dampened by the war in Iran and its impact on the US economy and consumer sentiment.

Mortgage rates, which were previously predicted to be lower this year than last, are now at record highs, and concerns about employment and inflation are putting a damper on homebuyer demand.

Buyers in the first half of this year were more concerned about the economy and credit rates than they were about housing prices, according to real estate agents who participated in the CNBC Housing Market Quarterly Survey.

“They’re afraid of war, they’re afraid of gas prices, [for] their job security,” said Faith Harmer, a representative in the Las Vegas area.

The CNBC Real Estate Market Survey is a national survey of randomly selected real estate agents across the United States. The responses to the first quarter survey were collected between March 24 and March 30. This quarter, 70 representatives shared their views.

When asked about the main concerns of their customers, about one-third of the representatives mentioned the economy, while another third mentioned the mortgage rates. The latter marked a huge jump from just 26% in the fourth quarter.

Only 9% of respondents in the first quarter survey said that price is the most important concern for their customers, down from 18% last time.

This shouldn’t be surprising, since the average rate for a 30-year fixed-rate loan hit a low of 5.99% the day before the Iran war began and then began to climb. It is now closer to 6.5%.

However, while many agents said prices were flat or down, almost twice as many officials, 29%, reported home prices rising in the first quarter than in the previous quarter. Prices can vary greatly depending on the market and region of the country.

But the price is not improving as many experts had predicted. When asked how the low price was hitting customers, 19% of agents said it was driving them out of the market. It was up from just 11% at the end of last year.

More than half of the agents reported at least one contract cancellation.

“Customers who were on the fence and decided to buy are now on the fence and going the other way, saying, ‘I’m not going to buy,'” said Eric Bramlett, an agent in Austin, Texas.

When consumer demand drops, homes stay on the market longer. In the first quarter, 31% of agents reported that their listing was on the market for more than six weeks, compared to 26% in the fourth quarter.

“We just had one recently where they wanted what they wanted, and they weren’t coming down at a price that the market would bear,” said Harmer, the Las Vegas agent. “So, in the end, they took it off the market.”

Now sellers are very worried about that waiting time. A total of 37% of respondents said that time to market is the most important thing for sellers, compared to 30% at the end of last year.

That took a share from the price as sellers were most concerned, with nearly half of agents putting it first to 39%.

However, a few agents reported a decrease in prices over the previous quarter, but that may be the result of the strength of the season and the effect of low mortgage rates in the middle of the first quarter, which gave consumers more purchasing power.

That may be why fewer agents said they had to liquidate homes compared to the fourth quarter, when agents reported a weaker-than-normal market with more frustrated sellers.

Although economic concerns and interest rates are rising, the agents of the first quarter are still saying that the market is in favor of the buyer or balanced. The share that said it was a consumer market fell quarter to quarter, from 42% to 36%, possibly due to new consumer sentiments – high credit rates, the war and a weak job market. And marketers are paying attention.

“We’ve had two sellers who were planning to list in May have decided, ‘Let’s hold on, let’s wait until later in the summer for our next house to buy, and then we’ll try to list in the fall,'” said Dana Bull, an agent in the Boston area. “So at first they thought that spring would be good for them, because it felt like it would be the best time, and now they don’t feel confident, and they want to wait for them.”

More than half of the agents surveyed said they expect the market to improve as the season progresses, but that share has dropped since the end of last year, when there was no war in the picture.

A high percentage of agents said they expect the market to remain the same as last quarter, which is important, as the market moves from the slowest period in housing history to one of the busiest.