Real Impact: What the February Jobs Report Means for Rental Housing

What Happened

The US economy added 151k jobs in February, rebounding from a downwardly revised 125k new payrolls in January but short of the expected 170k, according to the Bureau of Labor Statistics (BLS). The unemployment rate ticked up to 4.1%. Job growth in health care, finance, and transportation/warehousing drove the month-over-month uptick. Federal government jobs were the most notable decline, followed by declines in retail trade. Although many experts expect most of the impact of the Department of Government Efficiency (DOGE)-driven workforce cuts to show in the data come the Spring, the federal government registered 10k job cuts in February, possibly signaling what is to come.

Impact on Interest Rates

Immediately following the release, Federal Funds Rate futures, a market-based forecast of the Fed’s interest rate path, consolidated around a consensus of no change at the upcoming March meeting. Markets shifted from reflecting an 88.0% probability of no change in rates at the close of business on March 6th to pricing in a 95.0% probability of no change in the minutes following the release.

Year-end projections for interest rates also consolidated slightly. The majority forecast of three quarter-percentage-point cuts between now and the end of 2025 ticked up from a 31.9% chance prior to the employment release to a 33.0% chance immediately following it. The marginal shift in futures projections shows that markets generally expect the current rate outlook to hold unless there’s a more significant shift in labor market activity or inflation progress.

What it Means for Multifamily

Borrowing rates for developers and buyers should remain steady in the short term while the path of interest rates is slightly more certain compared to one day ago. With the consensus of three (3) rate cuts by the end of the year continuing to hold, some interest rate relief is expected as we head into the summer. Trade policy outcomes remain highly uncertain, driving hesitancy among both consumers and firms, which is filtering into employment activity. The Construction sector added a seasonally adjusted 19k jobs in February following a weak January, which saw just 2k new construction jobs added. Despite the February increase, construction hiring has sagged in recent months following a pullback in Multifamily permits and construction starts. With multifamily completions remaining near their cyclical highs and vacancy rates rising, developers have shown a limited appetite for expanding payrolls.