February 16, 2026 – Macroeconomic indicators suggest that the economy is stabilizing, a condition that would allow the Federal Reserve to put things on hold for now but may still cut rates later this year if it is necessary. With January job growth exceeding expectations and inflation surprising on the upside at the start of 2026, the economy is holding up better than previously thought. The Fed will likely remain patient and may not reduce its policy rate in the coming FOMC meetings in March and April. Flat retail sales and a reverse in small business optimism, however, provide a cautionary note that shows the economy is not out of the wood. A rate cut could still take place in the second half of 2026 if signs of distress are detected. The market has reacted positively after digesting the latest news, with the average 30-year fixed mortgage rate declining to its 3-year low last Friday. This is good news for the housing market, as the dip in rates will help further the improvement in affordability that we have seen in the last couple quarter.
Thank you to the California Association of Realtors for this information. I am thankful to be one of the 16.9% of realtors in the state that opened escrow on a property in the past week.
