In a report from the Bureau of Labor Statistics (BLS) on March 6, the U.S. economy lost 92,000 jobs in February, a month marred by severe winter weather. February was the third time in the past five months that payrolls declined, following a sharp revision showing a drop of 17,000 in December.
As stocks sold off following the report, housing economists said the report could indicate headwinds for demand, but said it was too early to tell if the trajectory for rates was shifting.
“Overall, the first two months of the year suggest we shouldn’t overreact to either January’s highs or this February’s lows,” said Realtor.com® Senior Economist Jake Krimmel. “It does appear the ‘low-hire, low-fire’ job market is still with us and the initial numbers are getting a bit messier. For the Federal Reserve, this report slightly complicates the labor side of the equation, but is unlikely to change much in the near term.”
The unemployment rate rose slightly to 4.4%. Employment in healthcare decreased by 28,000, reflecting strike activity at Kaiser Permanente that sidelined more than 30,000 workers in Hawaii and California. Employment in information and the federal government continued to trend down. Though the strike has since been resolved, it occurred during the BLS survey week so it subtracted from the jobs total.
Wages rose more than expected. Average hourly earnings increased 0.4% for the month and 3.8% from a year ago, both 0.1 percentage point above forecast.
“On the housing side, we should be careful not to ‘scoreboard watch’ weekly mortgage rate volatility too much,” Krimmel added. “It was tempting to celebrate a 5-handle last week, and equally tempting to lament this week’s 20-basis-point surge in 10-year yields as a sign that lower mortgage rates were short-lived. The relevant benchmark for the spring season is the year-over-year changes, not a February to March comparison. As long as the labor market continues to settle, the combination of stable employment and a 2.1% dip in median list prices means the conditions for a smooth takeoff in the housing market are forming nicely.”
MBA SVP and Chief Economist Mike Fratantoni noted that in 2025, job growth slowed to a crawl, and what little growth there was came from just a few sectors, notably healthcare.
“In February, with job losses in health care due to labor strikes, there was nothing left to support aggregate job growth,” he said. “Furthermore, job growth for December and January was revised down by a total of 69,000. The unemployment rate inched up as more workers re-entered the labor market but were unable to find work immediately. Wage growth increased slightly to 3.8% over the past year.
“The job market is softening and inflation is expected to increase due to a spike in oil prices resulting from the war in Iran,” he added. “Although this month’s job numbers were weaker than expected, we do not expect the FOMC (Federal Open Market Committee) to cut rates any time soon given the heightened inflation risk. MBA is sticking to its forecast that mortgage rates will remain in a range of 6% to 6.5% over the forecast horizon. A softer job market will be a headwind for housing demand as we enter the spring homebuying season.”
Information services, hurt by AI-related cuts, lost 11,000 jobs as part of a one-year trend during which the sector lost an average of 5,000 per month. Manufacturing jobs also declined 12,000, as did the federal government, off 10,000 for the month. President Trump’s efforts to cut federal payrolls has seen a slide of 330,000 jobs, or 11% of the total workforce, since October 2024, a few months before Trump took office, according to the BLS.
Although overall construction jobs were down slightly from January levels, residential real estate construction jobs were up 2.4%,
Mary Daly, president of the Federal Reserve Bank of San Francisco, told CNBC that “I think it just tells us that the hopes that the labor market was steadying, maybe that was too much. We also have inflation printing above target and oil prices rising. How long they last, we don’t know, but both of our goals are in our risks now.”
