On the heels of the decision from the Federal Reserve’s Open Market Committee (FOMC) to hold interest rates steady, the latest Bureau of Labor Statistics data appears to support the decision as jobs and unemployment saw improvement in January.
The latest Employment Situation Summary—aka the jobs report—saw the U.S. add 130,000 jobs in January, and the unemployment rate saw a very minor decrease from 4.4% in December to 4.3% in January. Gains in jobs were seen in healthcare (+82,000), social assistance (+42,000) and construction (+33,000), while federal government and financial activities saw losses (-34,000 and -22,000, respectively). Federal government losses were noted in the report as due to “some federal employees who accepted a deferred resignation offer in 2025 came off federal payrolls.”
January job growth in particular was characterized by several economists as surprising, as it came in above expectations. This is the largest monthly jobs increase seen in over a year as well, with the recent few months since September seeing less than 100,000 jobs added.
Mike Fratantoni, SVP and chief economist of the Mortgage Bankers Association, referred to the growth as “modest,” and noted that “this report provides support for FOMC officials who have voted to keep rates steady for the time being.”
He added that “job gains continue to be focused in just a few sectors, matching the uneven pace of economic growth we are seeing in many data releases.”
CoStar Chief Economist Christine Cooper added to Fratantoni’s sentiment that “going forward, the number of jobs to be added each month to keep the unemployment rate stable is expected to be around 40,000 this year, weighed down by slower labor force growth but boosted by provisions of the One Big Beautiful Bill Act, which are expected to lead to stronger growth.”
In terms of earrings, average hourly earnings for all employees on private nonfarm payrolls rose by 15 cents (0.4%) to $37.17, increasing by 3.7% over the past 12 months. Average hourly earnings of private-sector production and nonsupervisory employees rose by 12 cents (0.4%) to $31.95.
Bright MLS Chief Economist Lisa Sturtevent characterized the picture this jobs report paints as “muddy.” She explained that despite growth overall, “monthly job numbers have been consistently revised downward, so it can be difficult to get a clear read on the labor market.”
Sturtevant also noted that beyond this jobs report there are “other signs that the labor market is weakening, including fewer job openings and rising claims for unemployment insurance.”
As for future Fed decisions, Realtor.com® Senior Economist Jake Krimmel said that “markets are still predicting two rate cuts this year, but today’s better-than-expected report on current labor conditions means that, for now, the Fed is likely to remain on pause.”
Sturtevant added that if labor market conditions are indeed weakening as she said previously, “the Federal Reserve will almost certainly cut rates this year,” but the decision is “going to depend on ongoing revisions to the employment numbers, along with other labor market data and Friday’s inflation report.”
“Assuming inflation held steady in January, we could see at least one rate cut during the first half of 2026, but if job growth rebounds, it is harder to see a path toward multiple rate cuts this year,” she said.
Overall, Krimmel and Sturtevant agree on a brighter picture and “cautious optimism” for the housing market in the year ahead.
“More inventory, slower price growth, higher wages and lower mortgage rates are setting the stage for a relatively strong spring home-buying season,” said Sturtevant. “While economic uncertainty and affordability constraints will continue to be a challenge for some buyers, transactions this spring will be higher than a year ago, as the housing market becomes more balanced.”
“After a subdued 2024 and 2025, the combination of labor market firmness and rate stability could help boost affordability and jumpstart housing market activity heading into spring,” concluded Krimmel.
