Most homebuyers pay close attention to home prices and mortgage rates, but few stop to consider how the cost of gas can impact their ability to purchase a home. The reality is that gas prices affect much more than what you pay at the pump.

Recently, National Association of Realtors Chief Economist Lawrence Yun discussed the relationship between rising oil prices, inflation, and mortgage rates. According to Yun, “Just about everything that is transported and produced will be more costly. Consumer prices will rise. The Federal Reserve will delay rate cuts or may even raise rates if the rising oil prices persist for a long period.”

For prospective homebuyers in DeSoto, that means higher gas prices could indirectly affect affordability. As transportation and production costs increase, inflation often follows. When inflation remains elevated, mortgage rates tend to stay higher as well.

Yun pointed out that while many people remember the oil shocks of the 1970s, today’s economy is in a much different position.

“The 1970s oil shock ended with mortgage rates topping at 18%. That scenario will not repeat, given much more robust oil production in the United States and less dependency on oil to drive the overall economy. Still, we may average a 6.5% mortgage rate rather than 6% this year.”

For buyers, that half-percent difference can translate into hundreds of dollars each month depending on the loan amount. On the flip side, if oil prices retreat, inflation could ease and mortgage rates may move lower, creating additional opportunities for buyers.

This is why timing the market can be difficult. Rather than waiting for the perfect rate, many buyers are focusing on finding the right home and taking advantage of refinancing opportunities if rates decline in the future.

If you’re thinking about buying or selling, contact me at (214) 403-0805.