February 24, 2026 – The Inflation Question

Economic Commentary

Regardless of whether the Federal Reserve continues to lower their benchmark interest rate, there is no doubt about the fact that interest rates would be lower if inflation were not a continuing concern.  In the past few weeks, we have analyzed the questions surrounding the ongoing decrease in the growth of jobs and the effect this trend might have upon economic growth. It seems we are moving into unchartered territory in this regard.  Similarly, the questions surrounding the direction of inflation are just as confounding.

The economic changes brought about by the pandemic were unprecedented. We had never had an economy shut down overnight.  Ancient history, but the concern then was deflation as the price of many goods fell significantly – though certainly not the price of toilet paper. Turns out it was not so easy to restart the economy just as quickly and the resultant supply chain shortages contributed to hyper-inflation.  This inflationary period was also fueled by accompanying record low interest rates and stimulus dollars. Inflation peaked around 9.0% in early-to-mid-2022 and started down rather quickly. Within 12 months, it was close to the Fed’s goal of 2.0%.

Despite a brief period of approximately 24 months, the damage was done to the economy.  Costs from housing to health care weighed on the lives of average Americans, as well as those around the world as this inflation, like the pandemic, was a world-wide phenomenon. And the effects are not gone because — even though inflation at close to 3.0% is more “manageable” – prices are still much higher than they were in 2020. Thus, we have a period of time in which wage growth must catch up.  And at 3.0%, it appears the progress we experienced during that 12-month decline has either slowed or stalled, depending upon your perspective.  This is the question the Fed is grappling with – what will it take to move the last mile down to 2.0% and is this last bit of progress going to be worth a concurrent risk to economic growth?

Weekly Interest Rate Overview

The Markets. Mortgage rates moved to a two-year low in the past week. According to the Freddie Mac weekly survey, 30-year fixed rates fell to 6.01% last week from 6.09% the previous week. In addition, 15-year loans also decreased to 5.35%. A year ago, 30-year fixed rates averaged 6.85%, .84% higher than today. Attributed to Freddie Mac: “Mortgage rates dropped again this week, now down to their lowest level since September of 2022. This lower rate environment is not only improving affordability for prospective homebuyers, it also is strengthening the financial position of homeowners. Over the past year, refinance application activity has more than doubled, enabling many recent buyers to reduce their annual mortgage payments by thousands of dollars.” Note: Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.

Real Estate News

According to the U.S. Census Bureau’s latest estimates, the U.S. resident population grew by 1,781,060 to a total population of 341,784,857 in 2025. The population grew at a rate of 0.5%, a sharp decline from the near 1.0% growth in 2024. The growth rate was the lowest since 2021 when it grew at 0.2%. The vintage population estimates are released annually and represent the change in the U.S. population between July 1st of 2024 and 2025. The primary source of population growth continued to be net international migration. For 2025, the level of net international migration was less than half of its level in 2024, falling from 2.7 million to 1.3 million. Natural change, represented as births minus deaths, was up marginally from 514,277 to 518,858 in 2025. The decline in net international migration and stable natural change led to lower population growth nationally between 2024 and 2025.  Each region in the U.S. experienced population growth over the period. The South led in population growth at 0.9%, followed by the Midwest at 0.4%. Meanwhile, the West grew 0.3%, while the Northeast grew the least at 0.2%. California remained the most populous state with a population of 39,355,309. The next most populous state was Texas at 31,709,821. To round out the top five states by total population, the proceeding highest were Florida (23,462,518), New York (20,002,427), and Pennsylvania (13,059,432). Source: Eye on Housing, NAMB

The National Association of Realtors (NAR) Realtors Confidence Index showed an increase in the Market Outlook for both buyers and sellers, compared to the previous month and year. Average days on the market listed grew to 39 days, yet sellers continued to receive an unchanged average of 2.2 offers. While first-time buyers have decreased to 29%, cash purchasers continue to hold a steady 28% share of the market. Some 31% of those surveyed anticipate a year-over-year (YoY) rise in buyer traffic over the next three months, up from 22% last month and 27% a year ago. An estimated 28% of those surveyed anticipate a YoY rise in seller traffic over the next three months, up from 18% last month and 27% a year ago.  In certain housing markets, supply remains constrained compared to demand, leading to 16% of homes being sold above the list price. However, this figure is unchanged from last year and has decreased from 18% one month ago. The share of terminated contracts over the past three months stood at 5%, which is comparable to the previous month’s figure of 6% and last year’s figure of 5%.  First-time buyers made up an estimated 29% of purchasers, a slight decrease from 30% last month and 31% a year ago. Among all buyers, 18% made purchases for non-primary residence use, which is flat compared to last month and an increase from 16% last year. The share of home purchases for vacation use rose to 7%, compared to 5% a month prior and 4% a year prior. Source: MP Daily

In Q4 of 2025, foreclosure auction supply increased year-over-year, including a more than three-year high in conversion of scheduled foreclosure properties into completed auctions. Meanwhile, auction buyer activity weakened, led by a lower sales rate and fewer saves per property brought to auction, according to Auction.com. Foreclosure properties brought to auction (BTA) were up 7 percent quarter-over-quarter and up 48 percent year-over-year to a 23-quarter high, reaching 61 percent of the Q1 2020 level, Auction.com said. Meanwhile, Q4 2025 marked the fourth consecutive quarter with an annual increase in foreclosure BTA, and the 48 percent increase was the biggest since Q3 2022. Pricing signals were mixed, Auction.com said, with buyers paying slightly more relative to estimated value at foreclosure auction, but seller asking prices rose faster, contributing to a wider foreclosure bid-ask spread. Auction.com said that a survey of its buyers in early January 2026 shows a slight increase in willingness to buy compared to the previous quarter: 23 percent of those surveyed said market conditions were making them more willing to buy at auction, up from 19 percent in the previous quarter. There was early data showing that buyers were willing to pay more at auction, at least in some markets, Auction.com said. That might be a sign of recovering confidence in the housing market, Auction.com noted. Foreclosure auction buyers paid an average of 67.4 percent of estimated value in Q4 2025, up from 66.2 percent in the previous quarter and 66.6 percent a year ago.   Source: Auction.com