Real Impact: What the January 2026 Jobs Report Means for Rental Housing

Real Impact by Chandan Economics explores how cornerstone data releases influence interest rate forecasts and reshape the rental housing sector's outlook.

Last Updated: Februrary 11, 2026

What Happened: According to a delayed release of the Bureau of Labor Statistics' (BLS) January jobs report, total nonfarm payrolls rose by 130,000 during the month, far exceeding the Wall Street consensus estimate of just 55,000 payrolls.

Health Care again led job gains in January (+82,000), followed by Social Assistance (+42,000) and Construction (+33,000). Federal Government jobs continue to fall (-34,000), while Financial Services jobs also took a dip in January (-22,000).

The headline unemployment rate fell to 4.3%, while the U-6 rate, which also includes workers who are either part-time for economic reasons, marginally attached to the labor force, or are discouraged from seeking employment, fell 0.4% from December to 8.0%.

What It Means for Interest Rates: Over the past month, Federal Funds Rate futures have consistently indicated a consensus that rates will not change at the FOMC's March 2026 meeting. but with swings in its probability.

One day prior to the release of the January payrolls report, Federal Funds futures priced in a 79.9% chance of no rate change at the next FOMC meeting, leaving a roughly one-in-five chance of a 25 basis points (bps) cut in March.

However, in the hours after the report was released, the probability of a March rate cut fell to just 5.9%, as stronger-than-expected labor data led markets to anticipate a more hawkish policy stance.

The average forecast for the year-end Federal Funds rate was little changed, but movement trended toward the hawkish end of the curve. One day before the jobs report release, there was a 75.7% probability of at least two 25-basis-point cuts by the end of 2026. Following the release, the probability fell to to 70.4%.

What It Means for Rental Housing: The drop in the probability of a March rate cut suggests financing conditions will likely remain restrictive in the near term. While mortgage rates are only indirectly tied to movements in the Federal Funds rate, yield-curve pressures on US treasuries are also keeping mortgage rates relatively elevated, likely keeping more would-be buyers in the renter pool.

On the other hand, the resilience of the labor market is an overall positive development for the rental housing market. The Health Care and Social Assistance sectors skew toward wage-earning households that are more likely to rent than to own, particularly in today's elevated interest rate environment. These sectors continue to be key drivers of employment growth.

Further, the surge in Construction jobs expected to begin in 2026 is encouraging from both a supply and demand standpoint, given the sector's cost constraints and tepid hiring in 2025.