WASHINGTON, May 26 (Reuters) - U.S. single-family house prices edged up in March, but further increases are unlikely as the war with Iran pushes mortgage rates higher, dampening housing demand.

House prices gained 0.1% after a downwardly revised 0.1% dip in February, the Federal Housing Finance Agency said on Tuesday. Prices were previously reported to have been flat in February.

They increased 1.7% in the 12 months through March, after rising by the same margin in February. House prices rose 1.7% in the first quarter compared to the first three months of 2025.

The U.S.-Israel war with Iran has raised oil prices and is fanning inflation, boosting U.S. Treasury yields.

Mortgage rates track the 10-year Treasury note, whose yield is hovering near a 1-1/2 year high. The popular 30-year fixed mortgage rate averaged 6.51% last week, a nine-month high, data from mortgage finance agency Freddie Mac showed.

It averaged 5.98% at the end of February, when the war started, as Freddie Mac and Fannie Mae expanded purchases of mortgage-backed securities. 

House prices remain supported by a shortage of previously owned houses, especially starter homes.

Monthly house prices fell in five regions, including New England and West South Central. They increased in the Mountain, East North Central, Middle Atlantic and West North Central regions. On a year-over-year basis, prices increased 5.1% in the East North Central region, but dropped 0.9% in the West South Central region.