This Week In A Nutshell: With the Iran War stretching into its sixth week, mortgage rates will continue to ebb and flow with new developments. Additionally, markets will digest fresh inflation data for March this coming Friday.
Upcoming Attractions
Any new developments in the Iran War that impact energy prices will have the largest impact on rates this week. Absent that, our main focus will be on the March CPI inflation data, which will be released on Friday. It will be our first look at inflation data since the Iran war began. Headline inflation is expected to rise sharply, to a 3.4% annual rate from 2.4% previously. Core inflation, which excludes food and energy prices and is the Fed’s main focus, is expected to increase to a lesser extent, to 2.7% from 2.4%, due to a multitude of factors unrelated to the Iran War. February PCE data will be released on Wednesday. While the PCE is the Fed’s preferred inflation gauge, the data is unlikely to move markets because it is for February and since we already have February CPI and PPI data, there is unlikely to be much new information in the PCE release.
Last Week’s Highlights
Rates came down from the highs reached the previous week as investors unwound most of their bets for a Fed rate hike in 2026. On Friday, we got March data for the job market. It looked very rosy on the surface, but ultimately was noisy to interpret.
Diving a Little Deeper
The job creation data from the Bureau of Labor Statistics (BLS) monthly jobs report has been noticeably noisy to start off the year. 160,000 jobs were created in January, only for 133,000 to be destroyed in February and 178,000 to be created in March. What is going on?
- The recent uptick in volatility can mostly be attributed to change in the birth-death model that was introduced in February 2026. The birth-death model is how the BLS estimates how many jobs are being added or lost at new businesses opening and existing businesses closing that are not yet fully captured in its monthly employer survey. BLS changed their methodology because the old version was making bigger mistakes than usual after the pandemic, when business openings and closings were behaving less like the historical patterns the model relied on. The new approach still uses the old framework, but it now also brings in more current information from BLS’s monthly employer survey so the estimate can better reflect what is happening in real time. This should make the model more responsive and reduce the need for special temporary fixes like the extra pandemic-era adjustment it had been using, but it also makes the monthly data more volatile. The upshot is that instead of looking at the most recent month of data, we should look at a 3 or 6 month trailing average for job creation. When we do that, we see a weak labor market with little new hiring, but one that has firmed up–not deteriorated–in the most recent few months.
- It’s also worth pointing out that the swings actually aren’t that unusual relative to recent history since the pandemic, but they are more noticeable when the average is around zero because the numbers go from positive to negative. Relative to the immediate aftermath of the pandemic in 2022 the volatility we’re seeing right now is about the same. But compared to pre-pandemic and 2025 data, the data right now is much noisier.
Redfin Housing Market Reports
- Over Half of Home Listings Have Been Lingering on the Market For More Than 2 Months
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- In dollar terms, there’s $347 billion worth of stale listings in the U.S., more than ever before for this time of year. That’s because there are hundreds of thousands more home sellers than buyers, leading to homes sitting on the market.
- Stale inventory is most common in Florida, and least common in the Bay Area.
- Through Redfin’s new partnership with Compass, sellers can work to avoid stale listings by testing the market, which could reduce the risk of homes lingering on the market.
- The Great Housing Mismatch: Empty Nesters Own 28% of the Nation’s Large Homes, Millennial Families Own 16%
- Empty-nest baby boomers own many more 3-bedroom-plus U.S. homes than younger families raising children, underscoring a mismatch between who has space and who needs it.
- Millennials with kids are facing both affordability and inventory challenges–but at the same time, baby boomers have little financial incentive to move–and there’s limited inventory of reasonably priced, small, one-story homes for them to go to.
- More large homes could hit the market as affordability improves, the lock-in effect eases and it becomes easier for sellers to test the market via the new Redfin-Compass partnership.
- Empty-nest baby boomers own more large homes than millennials with kids in every major U.S. metro. Millennial families own the biggest portion of large homes in Austin and Columbus, and the smallest portion in Los Angeles.
