Labor Market Softens While Housing Holds Strong: What February 2026 Means for Homebuyers

The recent federal government shutdown delayed the Bureau of Labor Statistics’ January Jobs Report. Originally planned for February 6, it will now be released on February 11. This adds uncertainty to markets and delays a key data point that often influences interest rate expectations.

The latest ADP report showed that the private sector added only 22,000 jobs in January, well below the expected 48,000. Small businesses saw flat hiring, medium-sized firms added 41,000 jobs, and large companies cut 18,000 jobs. Education and health services led with a gain of 74,000 jobs, while business and professional services lost 57,000.

Wage growth continues to favor job switchers at 6.4 percent annually compared with 4.5 percent for workers who stayed in their jobs. These numbers reflect an ongoing slowdown. In 2025, only 398,000 jobs were added across the entire year, much lower than the 771,000 added in 2024. Upcoming government revisions may show even weaker hiring.

Broader indicators confirm this cooling trend. Revelio Labs reported 13,300 job losses in January. Initial jobless claims rose to 231,000, the highest level since early December, and continuing claims increased to 1.844 million, showing that it is taking longer for unemployed workers to find new opportunities. Job openings dropped to 6.54 million in December, down from 6.93 million the month before. Companies also announced 108,435 layoffs in January, the highest January total since 2009, while hiring announcements dropped to just 5,306. These signals point to a softening job market, which can influence inflation and future rate movements.

Despite economic weakening, the housing market remains a source of strength. Cotality’s Home Price Insights report shows values dipped 0.2 percent in December but remain 0.9 percent higher than a year ago. Forecasts now predict a 4.5 percent rise in home values over the next 12 months, up from the prior 4.3 percent projection. Expectations for easing mortgage rates and continued demand are supporting this positive outlook. To illustrate the power of appreciation, a $500,000 home increasing in value at 4 percent gains $20,000 in just one year.

Several important reports will shape markets in the week ahead. The January Jobs Report arrives Wednesday, the Consumer Price Index arrives Friday, and the December Retail Sales release is Tuesday. Existing Home Sales for January and the latest unemployment claims both arrive on Thursday.

Mortgage Bonds ended last week testing support at their 25-day Moving Average. If that support level holds, there may be room for improvement. The 10-year Treasury is also trading just below its own 25-day Moving Average. These technical levels often influence mortgage rate direction.

A weakening labor market could help bring down mortgage rates. Housing fundamentals remain strong with continued appreciation expected. Acting early may help buyers and homeowners take advantage of improving affordability.

As always, I am here to walk you through your options with honesty, clarity, and a personal approach. Your home is more than a loan; it is part of your family’s legacy.