Threats, rescue missions, an ultimatum, and a ceasefire. The situation in the Middle East remains fragile and unpredictable. But back home, we got another big beat from the BLS, and an encouragingly typical Spring rise in inventory.

Jobs growth remained weak, but the market is still focused on the potential inflationary impact of the US/Iran conflict. While mortgage rates have eased recently, they’re still nearly half a percentage point higher than they were pre-war.

It was a tough week for housing with oil prices rising further, wholesale inflation spiking, mortgage rates jumping, and the Fed more worried about inflation than the labor market. Let’s hope this war is over before the spring selling season really gets going.

The latest CPI (inflation) data was decent, and existing home sales are starting to pick up. But nobody cares, because everyone’s focused on the spike in oil prices in the wake of the US-Iran conflict. The last thing we need before the spring home-selling season is a sharp rise in inflation and mortgage rates. Thankfully, rates have so far stayed in the low sixes.

War is hell, and it’s also inflationary. That’s why the attack on Iran has led bond yields (and mortgage rates) to jump. The market is particularly worried about the impact of energy prices on US inflation. And the Fed will be less likely to cut rates if a prolonged war sends CPI higher. The good news is that mortgage rates are (so far) still in the low 6% range.

Last week, average 30-yr mortgage rates dropped to 5.99% — a near 4-year low. But transaction volumes haven’t significantly picked up yet. What’s the problem? Time. Refis can be done quickly, but buying a home takes months (from the initial decision to start looking.) Plus, it’s still the low season. If rates can stay this low into spring, buying will bloom.

Last week, the market decided it didn’t believe the strong January BLS jobs report — especially not in light of the huge revisions to the full-year 2025 numbers. Then on Friday we got a big drop in the January CPI (inflation). Net result: US treasury yields moved sharply lower and mortgage rates followed.

They did it again! After two weeks of very bond-friendly data, the BLS jobs report for January was a slap in the face: much larger-than-expected job gains and a drop in the unemployment rate. It’s really unbelievable. And I mean in both senses of the word.

This has been one of the weakest ‘jobs week’ in several years, with multiple sources (ADP, JOLTs, Challenger) consistently pointing to a much weaker labor market. Fed rate cut probabilities are rising, and average mortgage rates remain in the low 6% range.

The Fed kept rates steady at their latest meeting, citing stubbornly high inflation and low unemployment. And Jerome Powell implied that rates might be on hold for a while. A new Fed Chairman should be announced soon (but he won’t assume the role until May). Meanwhile, more signs of improving buyer demand in the Case-Shiller home price numbers.

December and January are two of the slowest months of the year for home sales. But the spring selling season is around the corner (things really start perking up in March), and if mortgage rates can stay in the low 6% range, activity levels should surge.