Lower Jobs & Higher Gas Means Steady Mortgage Rates
Home affordability is the best in 4 years, with median earners spending 27.4% of their incomes on median priced homes. This is down from 35.3% a year ago.
Taken alone, February’s job loss of 92k implies the Fed could cut rates at their March 18 FOMC meeting, and mortgage rates would drop.
But lower rate sentiment is being offset by inflation concerns as the Iran war pushes oil prices higher.
To balance its dual mandate, the Fed can lower rates to help employment and hike rates to preempt inflation.
With jobs weaker and prices higher, mortgage rates are steady so far.
Mortgage rates from various lenders rose .125% to .25% after the Iran strikes, from just under 6% to 6.125%, per Mortgage News Daily.
Rates held at 6.125% after today’s jobs report showing 92k job losses in February because mortgage bond traders believe the Fed’s dual mandate is in balance.
Translation: No Fed hikes or cuts imminent.
Which makes sense with Core CPI at 2.5% and Core PCE at 3%. Especially PCE is still too high above the Fed’s 2% target.
WHAT 6.125% MORTGAGE RATES MEAN FOR AFFORDABILITY
As for affordability, today’s mortgage rates of 6.125% are 1% lower than a year ago, and today’s newly built home prices of $414k are 4% lower than a year ago.
Median prices of existing and newly built homes are $397k and $414k, respectively.
At these accessible price points, households can buy homes with 5% down if they make $118k to $122k annually.
This calculation includes mortgage payment, taxes, insurance, mortgage insurance, and $1000 in non-housing payments like car loans or credit cards.
Home price growth was flat in 2025 at 0.6% (per Intercontinental Exchange, aka ICE), so home prices are favorable for buyers without a crash for sellers.
This trend continues in 2026 with home prices rising 0.4% annualized in February, the second slowest in 14 years.
Again, the takeaway here is: accessible home prices for buyers without a crash for sellers.
February home affordability hit its best level in 4 years, with median earners spending 27.4% of their incomes on median priced homes. This ICE housing payment-to-income ratio is down from 35.3% a year ago.
All of this adds up to a Spring homebuying season that’s looking more favorable than in recent years.
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Reference:
– U.S. Loses 92k jobs, 4.4% unemployment (BLS)
– Charts and analysis of jobs & oil price moves (Mortgage News Daily)