• The average Rocket Money user spent 29% more on gas in early May than in early February, and 34% more than a year ago. Gas prices rose nearly twice as much, though, signaling that drivers are getting by on less fuel.
  • Overall spending among Rocket Money users increased just 2.9%, suggesting that the Iran war and rising fuel prices are cutting into household budgets in other areas.
  • Drivers in Arkansas and Oklahoma saw some of the biggest surges in their gas bills, with the average driver in those states spending 36% more than before the war.
  • Rising oil prices also weighed on homebuying demand at the start of spring, pushing up mortgage rates and causing some would-be buyers to step back amid economic uncertainty. Demand ticked up in late April and May.

Rising gas prices are putting pressure on household budgets, with the typical Rocket Money user spending significantly more at the pump since the Iran war started while overall consumer spending stays mostly flat.

The average Rocket Money user spent 29% more at the pumps during the week ending May 16 than the week before the Iran war began in late February. On a year-over-year basis, gas spending is up 32%. This is according to data that compares the change in average gas spending for people using Rocket Money from the week of February 15-21 to the week of May 10-May 16.

Gas prices are rising faster than gas spending: Prices are up more than 50% year over year, while spending is up 32%. That suggests people are actually buying less fuel for their cars than before the Iran war–but they’re paying more when they do fuel up.

The surge in gas spending comes as rising oil prices stemming from the Iran war push U.S. fuel prices to near-record highs. Average gas prices nationwide hit $4.55 per gallon on May 20, according to data from GasBuddy Fuel Insights. That’s near the highest level on record aside from a spike in mid-2022, per the U.S. Energy Information Administration.

Overall household spending for Rocket Money users has increased just 2.9% since last year. That’s lower than the 3.8% rate of inflation, which means the typical household is buying fewer goods and/or cutting back on services.

“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.”

Gas Spending Rising Most in Arkansas and Oregon

In both Arkansas and Oregon, the average Rocket Money user is spending 38% and 35% more on gas, respectively, since before the Iran war–among the biggest increases in the country.

The increase was lower–though still substantial–in California, where gas prices are up roughly 23% since before the war began. Still, California drivers are paying more at the pump than anywhere else in the U.S.

While people are cutting back on other expenses, higher fuel costs and increased spending on gas is straining affordability for those already grappling with elevated costs of other things. The latest inflation report shows the cost of goods and services is rising nearly 4% year over year, though that’s driven largely by fuel prices.

Iran War Drove Up Mortgage Rates, Delayed Spring Homebuying Season

The Iran war and rising oil prices are also weighing on homebuying demand in several ways.

Ripple effects of oil prices extend beyond the gas pump. In addition to pushing up the amount of money Americans are spending at the pump, soaring oil prices have pushed up mortgage rates. The daily average mortgage rate hit a seven-month high of 6.64% in late March and rates have been somewhat volatile since then, clocking in at 6.57% in mid-May.

The war dampened homebuying activity in early spring. Higher mortgage rates and general economic unease stemming from the war curbed homebuying demand in March and early April in most of the country, with pending home sales falling on a year-over-year basis.

Buyers started coming off the sidelines in May. Pending home sales started ticking up in late April and the start of May even as mortgage rates stayed elevated and the Iran war continued. Redfin economists attribute rising demand to a strong labor market, and perhaps the spring homebuying season kicking in late. The housing market would likely be stronger if not for the Iran war. If the Iran war ends quickly, demand could continue to increase, but if it drags on and oil prices keep rising, demand would likely falter.

Some Americans are wary of making a major purchase. One-quarter (25%) of Americans were delaying or canceling plans for a major purchase like a home or car because of the Iran conflict as of the early days of the war in March, according to a Redfin survey, but most were undeterred.

Redfin agents in military-heavy markets say conflict is weighing on buyers. Redfin agents in places with major military populations report that some house hunters are pressing pause due to the war. An agent in Washington, D.C. said one buyer is stepping back due to uneasiness about tensions in the Middle East, and a Chicago agent said there’s a general air of hesitation about moving forward with buying plans because of economic tailwinds from the Iran conflict. In San Diego, an agent reported that a few buyers were delaying their home searches because they have family in Iran and are unsure about future plans.

Redfin economists say this is only the start of the impact the Iran war and rising oil prices will ultimately have on the housing market. The war is ongoing, without a clear way to end it in sight, and will likely continue to cause market volatility, higher oil prices and economic uncertainty.