January 27, 2026 – Will The Lagging Jobs Market Sway The Fed?

Economic Commentary

The Federal Reserve’s Open Market Committee lowered their short-term interest rates three times to close out 2025.  Minutes from their last meeting of the year revealed that there was a good amount of back-and-forth regarding their last rate move. Some members were not in favor of lowering rates in December because of a lack of progress on combatting inflation. Still others wanted a larger rate move downward. This contentious debate caused many analysts to predict that the Fed would abstain from any rate moves at least for their first meeting in January.   

Well, the first Fed meeting of the year starts today and there has been a slew of economic releases since the Fed’s meeting in December. Of vital importance has been the jobs data.  As we pointed out last week, the jobs machine, which has sustained a strong economy for the past several years, is no longer churning out jobs growth at a high rate. We also have pointed out that there are mitigating circumstances for this drop, such as the large decrease in legal immigration.  We also pointed out that it is not clear whether this correlation will in any way mitigate the effect of slower jobs growth on the economy.

Thus, the Fed is meeting today with a good dose of uncertainty surrounding their members. Ordinarily, the paucity of jobs created would be a call for further Fed action. And while inflation has not reached the Fed’s target of 2.0%, there is no current evidence that it is accelerating either. By tomorrow afternoon, we will know whether or not the majority of Fed members will be swayed by the employment situation. As we have seen, long-term interest rates such as mortgage rates continue to trend downward in anticipation of a slower economy. Let’s see if the Fed agrees.

Weekly Interest Rate Overview

The Markets. Mortgage rates moved slightly higher in the past week but stayed close to the 6.0% mark. According to the Freddie Mac weekly survey, 30-year fixed rates rose to 6.09% last week from 6.06% the previous week. In addition, 15-year loans also increased to 5.44%. A year ago, 30-year fixed rates averaged 6.96%, close to 1.0% higher than today. Attributed to Freddie Mac: “With the economy improving and the average 30-year fixed-rate mortgage nearly a percentage point lower than last year, more homebuyers are entering the market.” 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

For the last few years, many homeowners have felt like they were holding a winning hand, a two to three percent mortgage rate that seemed too good to ever give up. And honestly, who could blame them? Those rates were historic. The average 30-year fixed mortgage rate fell below 3 percent in 2020 and 2021, a level that has only occurred briefly in United States history and has since more than doubled, with rates hovering in the low to mid 6 percent range through late 2025. But as we move onward in 2026, the conversation is shifting. More homeowners are realizing that holding onto a low rate indefinitely may no longer be the winning strategy it once seemed. Instead of asking, “What rate am I giving up?” they are starting to ask a more important question: “Does my home still fit my life?”  Instead of focusing solely on the rate they would leave behind, many are evaluating whether their current home still aligns with their lifestyle and long-term goals. That shift in mindset is unlocking movement. Growing families are running out of space. Retirees are ready to simplify. Divorce, blended households, and multi-generational living arrangements are reshaping housing needs. Many of these decisions were put on hold over the last few years. Now, as the market steadies, quality of life priorities are taking center stage again.  For a long time, the biggest hesitation was not selling, it was buying the next home. That fear is beginning to fade. Active inventory has improved meaningfully from the extreme lows of 2021 and 2022.  Looking ahead, 2026 has the potential to represent true market normalization. Not a boom. Not a bust. Just balance, steadier pricing, improved inventory, more predictable financing options, and decisions driven by life instead of fear. Source: HousingWire

A recent study by Prudential Financial, Inc. shows that mass affluent people around the world are confident about their retirement preparedness, but there is work to be done to help them protect their nest eggs and secure dependable income that lasts a lifetime. Through its Pulse Survey series, Prudential has studied broader economic trends impacting Americans for more than 20 years. The 2025 Global Retirement Pulse Survey, the series’ first-ever global edition, was fielded among 4,200 mass affluent adults in the U.S., Brazil, Mexico, and Japan. Prudential defined mass affluent, a common proxy for those who are actively preparing for retirement, as people with more than $100,000 in investable assets or the equivalent amount in each country. It found that 87% of mass affluent adults across those markets (90% in Brazil, 89% in the U.S., 88% in Mexico, and 82% in Japan) believe they’ll cover essential costs in retirement; however, significant opportunity exists to help them confirm it — as just 41% have a financial advisor and only 32% have a written plan, half or fewer factored in things like inflation or healthcare and medical expenses, and merely 25% have a clear withdrawal strategy.  “One of the most fundamental components of effective retirement planning is envisioning your future self — the life you want and how you expect to fund it securely,” said Caroline Feeney, global head of Retirement and Insurance at Prudential. Most (83%) mass affluents worldwide say they would consider working in retirement.  More than one-third in Brazil, Mexico and Japan, and 1 in 5 in the U.S., believe future generations like Gen Z and Gen Alpha won’t be able to retire fully the way we think of it today. Source: Prudential Financial

Offsite construction – a method in which components are planned, designed, fabricated in a factory setting and then transported and assembled onsite – is something more community-based organizations (CBOs) are turning to as a solution to the housing affordability crisis. According to research from Harvard University’s Joint Center for Housing Studies (JCHS), offsite housing offers these CBOs a quicker and less costly way to build quality affordable residential housing. The common misconception that this method – also known as “factory-built housing” – has inflexible design options is proven wrong by this research. Factory-built housing comes in a wide array of styles and can be highly adaptable, making it an appropriate option for building more affordable neighborhoods. Now while offsite construction often saves time and money, it is not a guarantee. Before opting for this method, developers should take certain steps such as being intentional about location and methodology when employing offsite construction.  Some CBOs had to educate their local government officials and advocate for fairer regulatory environments and more responsive lending practices for modular construction. As the industry grows, increased institutional familiarity and regulatory acceptance, offsite construction methods are more likely to have a substantial and sustained impact on housing affordability.  Source: National Association of Home Builders