Rising gas prices are creating another affordability challenge for homebuyers already grappling with elevated mortgage rates and higher monthly housing costs.
New data from Rocket Money shows the average user spent 29% more on gas in early May than before the Iran conflict began in late February, while overall household spending increased just 2.9% during the same period. The findings suggest consumers are reallocating more of their budgets toward fuel and other essentials rather than expanding overall spending.
Gas prices themselves have climbed even faster. According to the report, prices are up more than 50% year over year, while gas spending rose 32%, suggesting consumers are purchasing less fuel overall but paying significantly more per fill-up.
“Although Americans are paying more at the pump since the start of the conflict in Iran, overall spending has remained nearly flat,” said Daniel McGrath, general manager of Rocket Money. “This suggests they’re cutting back in other areas out of necessity, especially in regions more vulnerable to price increases.”
For mortgage professionals, the trend highlights how affordability pressures are extending beyond home prices and mortgage rates themselves.
Higher fuel costs can directly impact borrower cash flow, savings accumulation, and monthly payment comfort levels, particularly for first-time buyers and borrowers already operating near debt-to-income qualification thresholds. In many cases, consumers may not fail to qualify for a mortgage outright, but rising day-to-day expenses can still affect purchasing decisions, loan size comfort levels, or willingness to move forward.
The pressure comes at a sensitive moment for the housing market.
Rocket Money noted that rising oil prices tied to the Iran conflict also contributed to mortgage-rate volatility this spring. The average mortgage rate climbed to 6.64% in late March before easing modestly in May, according to the report. Elevated rates and broader economic uncertainty contributed to softer homebuying activity in March and early April before demand began stabilizing later in the spring season.
The report also points to a growing affordability dynamic that mortgage originators may increasingly encounter: transportation costs becoming part of the housing affordability conversation.
Earlier this month, Realtor.com reported that rising fuel prices were effectively creating a new “commuter tax” for buyers moving farther from urban centers in search of lower home prices. For years, affordability-constrained buyers have relied on the “drive till you qualify” strategy to secure lower monthly mortgage payments in outer suburban and exurban markets. Higher gas prices may now be altering that equation.
For LOs, the broader implication is that affordability conversations are becoming increasingly holistic. Borrowers are evaluating not only mortgage payments, taxes, and insurance costs, but also commuting expenses, household budgets, and overall economic uncertainty.
The trend may also help explain why many lenders continue emphasizing temporary buydowns, adjustable-rate products, down payment assistance programs, and alternative qualification strategies as payment sensitivity remains high across much of the purchase market.
While homebuyer demand showed signs of improvement in late April and May, Rocket Money said continued geopolitical instability and rising oil prices could still weigh on housing activity if economic uncertainty persists.
*This article was primarily written by a human author. AI tools were used in a limited capacity for research assistance or light editing.
